Stocks Plummet as Tech Shares Fall Amid Economic Uncertainty

New York, NY — U.S. stocks closed sharply lower on Thursday, led by declines in technology shares, as investors reacted to economic uncertainty. The Dow Jones Industrial Average dropped 798 points, or 1.65%, while the S&P 500 fell 1.66% and the Nasdaq Composite slid 2.29%.

Thursday’s decline follows the recent conclusion of the longest government shutdown in U.S. history, which raised concerns about the timing of crucial economic data releases. On Wednesday, the House approved a funding measure, signed by President Donald Trump, officially ending the shutdown.

“Lacking fresh economic data, markets have become increasingly jittery in recent weeks,” said Seema Shah, chief global strategist at Principal Asset Management. “Each long-awaited data release has the potential to move markets dramatically.”

In the wake of the shutdown’s end, Wall Street is now focused on the delayed economic reports and how they may influence the Federal Reserve’s outlook. The fear measure known as the VIX increased by 18% as traders adjusted to the heightened volatility.

Carol Schleif, chief market strategist at BMO Private Wealth, noted, “The gears of the government should be working again soon. However, uncertainty remains around missed economic data and inflation reports.”

Investors are pricing in a 52% chance that the Fed will cut interest rates in December, down from 63% the previous day and 96% a month ago. “We still expect the Fed to cut rates again in December,” Schleif added.

The afternoon saw intensified selling as the earnings season cooled, leaving markets more vulnerable to shifts in investor sentiment. Major tech companies faced a sell-off, with shares of Tesla dropping 6.6%, Palantir falling 6.5%, and Nvidia declining 3.6%.

Ross Mayfield, an investment strategist at Baird commented, “Investors are reevaluating the prices they’re paying for big tech and AI stocks.” The Nasdaq has dropped nearly 5% since hitting a record high on October 29, erasing almost $2 trillion in market value during that time.

Despite the recent pullback, the decline in the Dow came after two consecutive days of record highs. The index briefly exceeded 48,000 points for the first time ever earlier in the week. Meanwhile, Bitcoin fell roughly 3.3% to around $98,250, continuing its struggle to recover from recent losses.

As traders gear up for the Fed’s policy meeting in December, they remain wary of a potential pause on rate cuts amid fears of persistent inflation. “If inflation stays stubborn, it could create headwinds for stock valuations,” said David Miller, CIO at Catalyst Funds.