(Updates to afternoon)
*
Indexes down: Dow 0.58%, S&P 500 0.76%, Nasdaq 1.37%
*
AI-related stocks show market's tech reliance, SOX index
down
1.6%
*
Challenger reports 183.1% surge in layoffs, worst October
in two
decades
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DoorDash ( DASH ) slides after quarterly revenue miss
By Stephen Culp
Nov 6 (Reuters) -
U.S. stocks turned lower on Thursday, approaching two-week
lows with a resumption of Tuesday's tech selloff as investors
contended with mounting economic uncertainty and stretched
valuations.
All three major U.S. equity indexes again slid on worries over
inflated stock prices, particularly from artificial
intelligence-related momentum shares.
The Philadelphia SE Semiconductor index dropped
1.6%.
AI-adjacent shares provided muscle to the rally in recent months
that pushed the indexes to a series of record-setting highs, so
weakness in the sector was a stark reminder of Wall Street's
reliance on tech.
"We've been through a period of very rapid gains, which
have been narrowly focused in individual securities," said
Michael Green, chief strategist at Simplify Asset Management in
Philadelphia. "We're seeing a vacillation right now between the
high-volatility stocks low-volatility 'safe' stocks."
"Those two are just like literally going back and forth for
the past couple of, you know, past couple of weeks," Green
added.
As the government shutdown persists, market participants must
contend with a dearth of economic indicators while the
data-reliant U.S. Federal Reserve is assessing the need for
further near-term interest rate cuts.
With government sources dark, alternative, private sector
sources have stepped in. On Thursday, executive outplacement
firm Challenger, Gray & Christmas reported that corporations
announced a 183.1% monthly surge in layoffs, marking the worst
October in over two decades. Cost cutting and AI-related efforts
were among the top reasons companies provided.
Separately, workforce analytics company Revelio Labs showed the
U.S. economy shed 9,100 jobs last month, with government
accounting for the bulk of the decline.
"The Challenger layoffs came in as disappointing, raising
the prospect that the labor market is weakening faster and more
than the Fed seems to be aware of," Green said. "That's led to
some repricing of the December rate cut that Powell suggested
was very much up for debate in this last speech."
On Wednesday, the U.S. Supreme Court heard arguments over
whether President Donald Trump's market-rattling tariffs
represented an overreach of presidential power.
The Dow Jones Industrial Average fell 273.71 points,
or 0.58%, to 47,037.29, the S&P 500 lost 51.43 points, or
0.76%, to 6,744.86 and the Nasdaq Composite lost 321.15
points, or 1.37%, to 23,178.65.
Among the 11 major sectors of the S&P 500, consumer
discretionary was the biggest drag, sliding 2.0%.
Energy enjoyed the largest percentage increase.
Third-quarter earnings season approached its home stretch,
with 424 companies in the S&P 500 having reported. Of those, 83%
have beaten Wall Street estimates, according to the most recent
LSEG data.
Analysts now expect year-on-year S&P 500 earnings growth of
16.8%, on aggregate, for the July-September period. That marks a
significant improvement over the 8.0% annual growth analysts
predicted at the beginning of the quarter, per LSEG.
DoorDash ( DASH ) slumped 16.0% after the delivery firm reported
third-quarter profit below Wall Street expectations on rising
expenses.
Cosmetics-maker Elf Beauty ( ELF ) forecast annual sales and
profit below expectations, and its shares tumbled 35.7%.
Snap jumped 11.7% after the social media firm beat
third-quarter revenue estimates and announced a partnership with
Perplexity AI.
Marvell Technology ( MRVL ) advanced 2.3% after Bloomberg
reported that SoftBank explored a potential takeover of the
company.
Declining issues outnumbered advancers by a 1.77-to-1 ratio
on the NYSE. There were 118 new highs and 181 new lows on the
NYSE.
On the Nasdaq, 1,367 stocks rose and 3,224 fell as declining
issues outnumbered advancers by a 2.36-to-1 ratio.
The S&P 500 posted 16 new 52-week highs and 21 new lows
while the Nasdaq Composite recorded 77 new highs and 216 new
lows.