Tech Stocks Lead Major Market Selloff
You’ve probably heard by now that Thursday wasn’t a great day for Wall Street. In fact, it was the worst trading session in over a month for major indexes. The market took a beating as technology stocks continued their downward spiral, and investors started second-guessing whether we’ll actually see another interest rate cut before the year ends.
The Dow Jones Industrial Average dropped 797.60 points, which works out to a 1.65% decline. That brought it down to 47,457.22—a far cry from the record highs we saw just the day before. Meanwhile, the S&P 500 wasn’t faring much better, falling 1.66% to close at 6,737.49. But the real pain was felt in the tech-heavy Nasdaq Composite, which plummeted 2.29% to finish at 22,870.36.
What made this selloff particularly notable? All three major averages, along with the small-cap Russell 2000 index, posted their worst performance since October 10. Ouch.
Disney’s Mixed Earnings Drag Down Communication Stocks
The communication services sector took a particularly hard hit on Thursday, largely thanks to Disney’s disappointing quarterly results. The entertainment giant fell nearly 8% after reporting revenue that missed analyst expectations. While Disney managed to beat earnings estimates with $1.11 per share versus the expected $1.05, their $22.46 billion in revenue came up short of the $22.75 billion consensus forecast.
It’s clear that Disney’s streaming growth wasn’t enough to offset the continued decline in traditional TV viewership. This pattern is becoming increasingly common across the media landscape as consumers cut the cord.
Why Tech Stocks Are Under Pressure
Investors have been hitting the sell button on technology stocks for several days now, especially those riding the artificial intelligence wave. The concern? Valuations might have gotten ahead of themselves. Companies like Nvidia, Broadcom, and Alphabet all saw their shares decline as the market questions whether AI investments will pay off as quickly as promised.
Ron Albahary from Laird Norton Wealth Management offered some perspective, calling the pullback “healthy” and a natural consolidation. He pointed out that eventually, all the capital expenditure flowing into AI needs to demonstrate real-world benefits across healthcare, manufacturing, and other industries. That’s the narrative investors are banking on—but they’re growing impatient.
Federal Reserve Rate Cut Expectations Take a Sharp Turn
Here’s where things get interesting for your wallet and investment portfolio. Just a day ago, markets were pricing in a 62.9% chance that the Federal Reserve would cut interest rates by a quarter percentage point at its December meeting. Fast forward to Thursday, and that probability dropped to barely above 51%.
What changed so quickly? Federal Reserve officials have been dropping hints that a December rate cut isn’t guaranteed. Fed Chair Jerome Powell himself said it wasn’t “in the bag” a couple weeks ago, and recent comments from his colleagues suggest genuine hesitation about easing policy again so soon.
The Government Shutdown’s Economic Impact
The recent government shutdown—the longest in U.S. history at over six weeks—created a data blackout for the Fed. Key economic reports like the October jobs numbers and inflation data were delayed or suspended entirely. White House press secretary Karoline Leavitt even suggested some of these reports might never be released.
President Donald Trump signed the funding bill Wednesday evening, ending the standoff and keeping the government operational through January. However, the damage to economic data collection has already been done. The Fed has essentially been flying blind, making it harder to justify any policy moves in December.
Carol Schleif from BMO Private Wealth warned that we should expect “some market chop over the coming weeks” as government agencies restart their data collection and reporting processes. Nobody knows exactly what those inflation and jobs numbers will look like once they’re finally published.
Bright Spots in an Otherwise Gloomy Day
Not every sector suffered on Thursday. Healthcare stocks bucked the trend, with the Health Care Select Sector SPDR Fund climbing nearly 1%. This marked the fund’s ninth consecutive positive session, representing a gain of more than 6% over that stretch. If it closes higher again, it’ll tie the longest daily winning streak since January 2004.
Cisco’s Strong Performance Offers Hope
After the closing bell, Cisco provided some much-needed good news. The networking company’s shares jumped more than 7% in extended trading after posting stellar first-quarter results. Cisco earned $1 per share on revenue of $14.88 billion, beating analyst estimates on both metrics.
Better yet, Cisco raised its full-year outlook. The company now expects adjusted earnings between $4.08 and $4.14 per share, with revenue projected at $60.2 billion to $61 billion. That’s a meaningful increase from previous guidance and suggests the tech sector isn’t completely doomed.
Other Notable Movers
Several companies made waves with their Thursday performance. Planet Fitness climbed about 4% after issuing optimistic guidance for fiscal years 2026 through 2028. The gym chain expects new club growth between 6% and 7% annually, which sounds pretty healthy for a post-pandemic recovery story.
Meanwhile, Sweetgreen shares rose nearly 8% after co-founder Nicolas Jammet bought roughly $1 million worth of stock. This insider buying came at an opportune time—the salad chain’s shares have been battered down more than 80% year-to-date due to weakening customer traffic.
Cryptocurrency Markets Join the Selloff
It wasn’t just traditional stocks taking a beating. Bitcoin’s price fell to $98,072.76 on Thursday, marking its lowest level since May 8. This represents a significant pullback from recent highs, despite several positive developments in the crypto space including new ETF approvals.
New Crypto Products Launch Despite Market Weakness
Interestingly, the weakness in crypto prices didn’t stop new products from hitting the market. Canary Capital’s spot XRP exchange-traded fund debuted Thursday, offering investors direct exposure to the Ripple-linked cryptocurrency. This follows October’s approval of spot Solana ETFs, continuing a trend of U.S. regulators warming up to digital assets.
Cash App also announced plans to support stablecoin transfers starting early next year. Stablecoins—cryptocurrencies pegged to assets like the U.S. dollar—have been experiencing a boom lately. JPMorgan forecasts the stablecoin market could reach $750 billion in the coming years.
What Happens After Government Reopenings
Historical patterns suggest stocks typically rally after government shutdowns end. The S&P 500 fell more than 2% in October during the shutdown and has gotten off to an uneven start in November. However, past data shows markets often see strong gains once normal operations resume.
Investors will be watching closely to see what economic data emerges in the coming weeks. The Fed needs reliable information to make policy decisions, and markets need clarity about the economic trajectory. Right now, everyone’s operating with incomplete information, which naturally increases volatility.
Elon Musk’s xAI Raises Massive Funding
In other tech news, Elon Musk’s artificial intelligence company xAI raised $15 billion from investors, adding $5 billion to a previous $10 billion round. This values the startup at $200 billion. Much of this money will fund graphic processing units that power large language models.
These sky-high valuations show that despite Thursday’s selloff, investor appetite for AI companies remains strong. The question is whether these companies can eventually justify their valuations with actual profits and real-world applications. That’s what the market is trying to figure out right now, and it’s creating significant uncertainty along the way.
