Nasdaq experienced a significant decline as apprehensions regarding the valuation of artificial intelligence stocks reemerged. The ongoing government shutdown has undermined the confidence of market participants in riskier assets such as equities, particularly due to the lack of government data. The deterioration of the situation was exacerbated by weak labor market data. All three major stock indexes concluded the trading session in negative territory. The Dow Jones Industrial Average fell 0.8%, a decline of 398.70 points, closing at 46,912.30. Significantly, 20 of the 30 components of the index concluded in negative territory, whereas 10 ended in positive territory. The primary underperformer in the blue-chip index was Salesforce Inc. The leading developer of CRM software experienced a decline of 5.3% in its stock price.

The tech-heavy Nasdaq Composite concluded at 23,053.99, declining by 1.9% or 445.81 points, primarily driven by the underwhelming performance of AI infrastructure giants. The S&P 500 experienced a decline of 1.1%, concluding the session at 6,720.32. Among the 11 broad sectors of the market index, nine concluded in negative territory, whereas two remained in positive territory. The Consumer Discretionary Select Sector SPDR and the Technology Select Sector SPDR experienced declines of 2.3% and 2%, respectively. On the other hand, the Energy Select Sector SPDR advanced 1%. The fear gauge, the CBOE Volatility Index, experienced an increase of 8.3%, reaching a level of 19.50. On Thursday, the trading volume reached 20.77 billion shares, which is below the 20-session average of 20.99 billion shares. On the NYSE, the ratio of decliners to advancers stood at 1.97-to-1. On the Nasdaq, a ratio of 2.69-to-1 indicated a preference for declining issues.

Investors realized gains on AI infrastructure developers amid apprehensions regarding the significantly inflated valuations in this sector. Last month, JPMorgan Chase’s CEO Jamie Dimon cautioned about a notable stock market correction anticipated within the next six months to two years. Prominent investment banks have similarly issued warnings regarding this matter. David Solomon, the CEO of Goldman Sachs, stated that it is “likely there’ll be a 10 to 20% drawdown in equity markets sometime in the next 12 to 24 months.” Ted Pick stated: “We should also welcome the possibility that there would be drawdowns, 10 to 15% drawdowns that are not driven by some sort of macro cliff effect.” The remarkable bull market observed over the last three years can largely be attributed to the significant appreciation in stock prices of companies involved in AI infrastructure, as well as those engaged in application and software development. A significant cohort of financial researchers and economists has cautioned that the AI boom could encounter substantial obstacles in the foreseeable future. The ongoing U.S. government shutdown has now reached a duration of 38 days. This marks the most extended government shutdown recorded in the nation’s history. The Congress was unable to broker a consensus between the Republicans and Democrats regarding the provision of stopgap funding for the government. Consequently, policymakers, investors, and traders are experiencing a deficiency in essential economic data.

The Federal Reserve officials are experiencing significant challenges due to the lack of essential economic data. The shutdown led to a significant portion of government employees either being furloughed or engaged in essential roles without compensation. On Nov. 5, outplacement firm Challenger, Gray & Christmas reported that U.S. job cuts for the month of October totaled 153,074, soaring 183% sequentially and 175% year over year. This represented the most significant job reductions for any October since 2003. Furthermore, the report indicated that 2025 marks the highest level of announced layoffs since 2009. In October, the technology sector experienced the largest number of job cuts, driven by restructuring efforts linked to AI integration. This sector experienced a reduction of 33,281 jobs in the previous month. Furthermore, workforce analytics firm Revelio Labs indicated that the U.S. economy experienced a contraction of 9,100 jobs in October, predominantly driven by reductions in the government sector.