U.S. stocks continued to decline during Thursday's late trading session, with technology shares leading the downturn. Investors are growing concerned about the adverse effects of artificial intelligence development, which could potentially disrupt business models across industries and drive up unemployment rates.
The Dow Jones Industrial Average fell by 364.68 points, or 0.73%, to close at 49,756.72. The Nasdaq Composite dropped 351.67 points, or 1.52%, settling at 22,714.79, while the S&P 500 index declined by 66.44 points, or 0.96%, ending at 6,875.03.
Cisco Systems led the decline in the technology sector, with its shares plunging 11.8%. The network hardware manufacturer, known for its switches and routers, had previously issued disappointing performance guidance for the current quarter.
This year, specific segments of the stock market have faced pressure as artificial intelligence tools emerge—tools capable of replicating certain industry operations or, at the very least, eroding profit margins.
Financial stocks such as Morgan Stanley came under pressure due to concerns that AI could disrupt wealth management services. Meanwhile, trucking and logistics companies like C.H. Robinson saw their shares plummet by 22% amid fears that AI optimization could negatively impact specific revenue streams in freight operations.
Concerns about AI's disruptive influence have even spread to the real estate sector, affecting stocks like CBRE Group and SL Green Realty, as rising unemployment could reduce demand for office space.
Software stocks, which have been troubled by disruption fears in recent weeks, extended their year-to-date losses during the day's trading. Salesforce shares fell 2%, bringing their decline for the year to over 31%. Autodesk dropped more than 5%, with its year-to-date loss reaching 26%.
The iShares Expanded Tech-Software Sector ETF (IGV) declined by 3%—the fund is now down approximately 32% from its recent peak.
Commenting on the recent sell-off, Ross Mayfield, an investment strategist at Baird, stated, "In my view, this is purely herd mentality. Sell first, analyze later—but don't be the one left holding the bag. Money flowing out of the software sector has other places to go."
The sell-off in silver—a popular trade among retail investors this year—intensified the risk-off sentiment on Thursday. Silver futures plummeted by 9%.
Investors sought safety in more defensive segments of the market. Walmart and Coca-Cola saw their shares rise by 3% and 2%, respectively. Consumer staples and utilities led the gains among S&P 500 sectors, both advancing more than 1%.
In the previous trading session, stocks closed lower after an early rally fueled by a strong employment report. Enthusiasm for the data waned as economists questioned whether it signaled the beginning of a sustained job growth trend, especially since accompanying revisions showed zero employment growth in the second half of 2025.
Traders are now preparing for Friday's key inflation report. Economists surveyed by Dow Jones expect both the headline and core Consumer Price Index (excluding food and energy prices) for January to show a month-over-month increase of 0.3%.
"Now that we have solid employment data, the CPI is less critical because the jobs figures alone are enough to keep the Federal Reserve on hold for quite some time," Mayfield noted. "If the CPI comes in high, you still have several months of data to gauge the trend before the Fed faces any tough decisions."
On the other hand, if the data turns out weaker, the strategist anticipates that Friday could turn into a risk-on trading day—though, he added, "the numbers would have to be quite, quite poor to genuinely impact both the stock market and federal funds futures."