Stocks fell deeper on Thursday as renewed artificial intelligence jitters rocked the broader market, sparking a sell-off across multiple sectors as investors feared the emerging technology could disrupt industries.
The Dow Jones Industrial Average (NYSE: DIA) dropped nearly 670 points to settle below 50,000 at 49,451.98, while the S&P 500 Index (NYSE: SPY) fell 1.6% and the Nasdaq Composite (NASDAQ: QQQ) lost over 2% to close at 6,832.76 and 22,597.15, respectively.
Networking hardware provider Cisco Systems (NASDAQ: CSCO) was in the spotlight on Thursday after the company issued disappointing forward guidance despite its better-than-expected fiscal second-quarter. Other tech names like Nvidia (NASDAQ: NVDA), Meta Platforms (NASDAQ: META), Amazon (NASDAQ: AMZN) and Apple (NASDAQ: AAPL) also fell lower.
Other industries like freight trucking and logistics were also impacted on Thursday on AI concerns as a new tool called SemiCab was released by Algorhythm Holdings, sparking worries that the AI rollout could impact industry service demand. Leading trucking and logistics names including C.H. Robinson (NASDAQ: CHRW), RXO (NYSE: RXO), J.B. Hunt Transportation Services (NASDAQ: JBHT), and XPO (NYSE: XPO) all declined on the news.
In earnings news, McDonald's (NYSE: MCD) reported better-than-expected quarterly earnings late Wednesday, with its U.S. same-store sales increasing by 6.8% due to strong traffic from its promotions. The company said it plans to add more menu items that would interest consumers using GLP-1 drugs, a key long-term concern for the fast-food restaurant chain as consumer habits shift.
"We'll be led by the customers and what they want from us, but there's plenty [for] them to enjoy on our menu currently," said Jill McDonald, global chief restaurant experience officer, during the company's earnings call with analysts.
For economic news, initial jobless claims came in lower-than-expected for the week ended Feb. 7, down 5,000 from the previous week to a seasonally adjusted total of 227,000. Continuing claims, which trail a week behind, rose by 21,000 to total 1.86 million.
Elsewhere, Bank of America economics wrote in a note on Thursday that January's unexpectedly strong jobs report signals that there could be now further interest rate cuts from the Federal Reserve under Chair Jerome Powell's term, calling Wednesday's report "a feast for the hawks." The Bureau of Labor Statistics' report showed U.S. employers adding 130,000 jobs in January, more than double expectations.
"Payrolls surged above all expectations, the downward revisions were minimal, and wages and hours were up as well," the economists wrote. "The broad-based strength in the Jan jobs report vindicates our view that the Fed won't cut under Powell."
For Friday, market participants will focus on earnings reports from companies including Applied Materials (NASDAQ: AMAT), Arista Networks (NASDAQ: ANET), Coinbase Global (NASDAQ: COIN) and Moderna (NASDAQ: MRNA). Key economic readings include January's consumer price index (CPI) release Friday morning.