US Equity Indexes Sink as Labor Market Fragility Hits Cyclicals, Big-Tech Extends Decline

04:54 PM EST, 02/05/2026 (MT Newswires) -- US equity indexes fell on Thursday, with the Nasdaq Composite plunging more than 360 points and the Dow Jones Industrial Average diving almost 600 points, as weak labor market reports sank Treasury yields and investors remained cautious about big tech's AI spending plans.

Nasdaq dropped 1.6% to 22,540.59, with the S&P 500 down 1.2% to 6,798.40 and the Dow lower by 1.2% to 48,908.72.

Materials, consumer discretionary, and technology led the decliners, while utilities and consumer staples emerged as sole gainers. Technology is set to be the worst-performing sector this week.

January's job cut announcements soared to the highest since October, driven by layoffs at United Parcel Service (UPS) and Amazon.com (AMZN) , Challenger Gray & Christmas said. A total of 108,435 layoff plans were disclosed, more than triple the tally in December and up 118% year over year.

"Generally, we see a high number of job cuts in the first quarter, but this is a high total for January," said the firm's chief revenue officer, Andy Challenger. "It means most of these plans were set at the end of 2025, signaling employers are less-than-optimistic about the outlook for 2026."

Job openings fell to 6.542 million in December, according to the Bureau of Labor Statistics, below the 7.25 million expected in a Bloomberg-compiled survey and down from 6.928 million reported in November. The December print represents 3.9% of total employment, down from 4.2% November and below the 4.5% reported a year earlier.

US Treasury yields plummeted, with the 10-year down nine basis points to 4.19% and the two-year sliding 10 basis points to 3.46%.

"We are raising our 2026 10-year and 30-year U.S. Treasury yield target ranges by a quarter point and a half point, respectively, implying a wider spread between short- and long-term interest rates this year," a note from the Wells Fargo Investment Institute said.

Alphabet (GOOG, GOOGL) reported higher Q4 earnings and revenue late Wednesday. The company said it expects to incur capital expenditure this year of as much as $185 billion, which, according to a Deutsche Bank note, is 55% above market expectations. Shares of Alphabet closed lower on the day.

"These fears of AI disruption have grown from worries about seat-based business models to more general existential risk perceptions, and investors are showing little tolerance for anything controversial when it comes to AI-related disruption," Steve Koenig, head of software and services research in the US at Macquarie, said in a note. "We perceive a spectrum of risk and opportunity across the sector, not blanket existential risk."

The third-biggest laggard on the Dow was Amazon (AMZN), down 4.4% at the close. The online retailer's shares were down 7.9% in after-hours activity following the release of its quarterly earnings, which missed market expectations.

The Global X Artificial Intelligence & Technology ETF (AIQ), with billions in net assets and investments in AI-related firms, dropped 1.8% at the close on Thursday, reflecting the market's current aversion to AI-related names.

In precious metals market news, gold futures dropped 2.5% to $4,826.2 per troy ounce, and silver futures plunged 14% to $72.19 per troy ounce, adding to the risk-off sentiment pervading across Wall Street.

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