Wall Street Suffers Steep Losses Amid Tech Selloff
Global financial markets experienced a turbulent day as major US indices closed sharply lower, driven by a pronounced selloff in technology stocks. The S&P 500 fell more than 1.8% for the week, closing at 6,728 after hitting a high of 6,857 on Monday before entering a steady decline. The Dow Jones Industrial Average also lost over 1%, while the Nasdaq saw the steepest drop, plummeting 4.1% amid fears of a potential artificial intelligence (AI) bubble. The Nasdaq ended the week at 25,059, more than 1,000 points below its Monday open.
Investor anxiety was further fueled by disappointing earnings from major chipmakers and AI-focused companies. Concerns about lofty valuations and whether these firms can sustain their rapid growth have led to a sharp correction in the sector, erasing billions in market value. This volatility in tech weighed heavily on broader market sentiment, with many investors seeking safer assets such as bonds, which saw a modest rally.
Government Shutdown Sets New Record, Data Releases Delayed
The US government shutdown, now entering its sixth week, has become the longest in history. The prolonged closure has delayed critical economic data releases, including the October jobs report, which was scheduled for November 7 but remains postponed indefinitely. This marks the second consecutive month with a delayed jobs report, leaving investors and policymakers with limited visibility into the true state of the labor market.
Despite the lack of official data, the ADP nonfarm payroll report provided some insight, indicating that the US economy added 42,000 jobs in the past month—slightly above expectations and a significant improvement from the previous month’s job losses. However, uncertainty remains high, and the full impact of the shutdown on economic growth is yet to be determined.
Mixed Economic Signals: Manufacturing Weakens, Services Resilient
Recent economic indicators have painted a mixed picture of the US economy. The ISM Manufacturing PMI came in at 48.7, signaling a minor contraction in the sector and continuing a trend of manufacturing weakness. In contrast, the ISM Services PMI rose to 52.4, exceeding expectations and last month’s reading, suggesting that demand for services remains robust even as manufacturing falters.
Consumer sentiment remains subdued, with the University of Michigan’s preliminary reading at 50.3. Inflation expectations are elevated, with consumers anticipating a 4.7% increase in prices over the next year. These figures highlight the ongoing challenges facing households as they navigate rising costs and economic uncertainty.
Global Central Banks Hold Steady as Inflation and Jobs Data Diverge
Internationally, central banks largely opted for caution. The Swiss government reported a 0.3% monthly decline in inflation, while Australia and the United Kingdom kept their key interest rates unchanged at 3.6% and 4%, respectively. In Canada, the unemployment rate edged up to 6.9%, but the economy added 66,000 jobs in the latest report, reflecting a degree of resilience.
These decisions underscore a global environment marked by persistent inflation concerns, uneven labor market recoveries, and heightened sensitivity to monetary policy shifts.
Crypto and Bond Markets React to Risk-Off Sentiment
The recent market turmoil was not limited to equities. Bitcoin fell below the psychologically significant $100,000 mark for the first time since summer, as risk appetite waned and investors sought safety. Bond markets saw increased demand, with yields on US Treasuries edging lower, reflecting a flight to quality amid uncertainty.
Looking Ahead: Key Data Hinges on Shutdown Resolution
The outlook for the coming week remains clouded by the ongoing government shutdown. If a resolution is reached, investors will be closely watching for the release of inflation data and retail sales figures, which are crucial for assessing the health of the US economy. Internationally, Australia is set to report unemployment changes, and the UK will release updated GDP numbers—both of which could further influence global market sentiment.
Conclusion
The combination of a deepening tech selloff, the longest government shutdown on record, and mixed economic signals has created an atmosphere of heightened uncertainty in global financial markets. Investors are bracing for continued volatility as they await critical data releases and monitor developments in both the US and abroad. The coming days will be pivotal in determining whether markets can stabilize or if further turbulence lies ahead.