US Stock Market Today: NASDAQ Drops 1% & S&P 500 Slips 0.5%, as Tech Stocks and Fed Comments Weigh on Investor Sentiment

US equity markets declined on Thursday, driven by a selloff in major technology companies and cautious sentiment following signals from the Federal Reserve. The S&P 500 fell 0.5% by midday in New York, while the NASDAQ 100 dropped 1%. The Dow Jones Industrial Average gained 0.4%, supported by shares in the industrial and financial sectors. The Russell 2000 Index rose 0.2%, while the MSCI World Index slipped 0.6%.

In Europe, the Stoxx 600 Index fell 0.2% as investor optimism faded amid mixed earnings results. Market participants cited concerns about stretched valuations and uneven performance across sectors. The Bloomberg Magnificent 7 Total Return Index slid 2.2%, reflecting investor caution toward megacap technology stocks that have driven much of the year’s market gains.

Wall Street paused its rally as Meta Platforms Inc. sank 11% after announcing plans to issue at least $25 billion in investment-grade bonds to support its expansion of artificial intelligence. Despite gains in smaller-cap stocks, the technology sector’s losses dragged major benchmarks lower, signaling potential profit-taking after weeks of firm performance.

Federal Reserve Comments Pressure Market Sentiment

Federal Reserve Chair Jerome Powell’s remarks about slowing the pace of interest-rate cuts added to the cautious tone in financial markets. The Federal Reserve decreased its benchmark interest rate by 25 basis points to a range of 3.75%–4% signifying its second straight cut. However, Chairman Powell issued a caution against expecting additional reductions in December.

The central bank’s decision drew divided reactions from policymakers, with two dissenting votes on whether to adjust the rate further. Market analysts noted that Powell’s warning indicated a preference for maintaining restrictive monetary policy for a longer period to manage inflation risks. Treasury yields were broadly steady, with the 10-year yield holding at 4.07%. The dollar appreciated by 0.4% against major currencies, whereas the euro and the pound experienced modest declines.

Meanwhile, cryptocurrencies also showed market weakness with major digital assets down. Bitcoin fell 2.3% to $108,000, and ETHER fell by 4.5% to $3,770.

In commodities trading, spot gold surged 1% to $4,002 an ounce, helped by a retreat in bond yields and its status as a traditional haven.

US-China Trade Truce and Global Economic Outlook

Furthermore, the announcement of a one-year trade truce between the United States and China offered only short-term comfort to investors. The agreement included commitments to lower tariffs, ease export controls, and improve bilateral relations. While it was a temporary stand on intensifying trade disputes, it did not address fundamental issues such as technology transfers and market access.

Additionally, US President Donald Trump and Chinese President Xi Jinping both highlighted the importance of cooperation during their meeting, although analysts warned that the deal is still temporary. Economists noted that while the truce could help stabilize global supply chains and lessen trade uncertainties, it is not a complete solution.

Corporate Highlights

• Meta Platforms Inc. plans to issue $25 billion in investment-grade bonds following a warning of higher AI-related spending.

• Microsoft Corp. reported continued data-center shortages affecting Azure performance.

• Alphabet Inc. reported strong demand for cloud and AI services, offsetting increased capital expenditures.

• Palantir Technologies Inc. has filed a lawsuit against former engineers, alleging that they developed a competing AI firm.

• OpenAI is preparing for a potential IPO next year that could value it at $1 trillion.

• Eli Lilly & Co. raised its guidance amid strong demand for weight-loss and diabetes drugs.

• Merck & Co. cut its 2025 revenue outlook after weak quarterly results.

• Biogen Inc. reduced profit guidance due to higher acquisition costs.

• Chipotle Mexican Grill Inc. cut its outlook again as consumer spending softened.

• Comcast Corp. reported continued losses of broadband subscribers.

• Shell Plc exceeded profit forecasts and maintained buybacks despite weaker oil prices.

• Volkswagen AG warned of potential production issues due to semiconductor shortages.

• Nissan Motor Co. projected an annual loss of $1.8 billion amid cost-cutting efforts.

• Novo Nordisk A/S made an unsolicited offer for Metsera Inc. to expand its weight-loss portfolio.

Market Outlook

Analysts expect volatility to remain elevated as investors assess the impact of rising capital expenditures among technology giants and slower progress on monetary easing. Despite the recent downturn, UBS and other strategists remain confident that artificial intelligence will support long-term market growth.

The focus now turns to upcoming earnings reports from Apple Inc. and Amazon.com Inc., which could influence the next market direction. While optimism remains about the AI-driven growth story, the notable increase in spending from major companies and signs of policy restraint imply that investors could become more discerning in the upcoming weeks.

Also Read: US Stock Market Today: S&P 500 Rises 0.2%