US Stocks Slide as Tech Sell-Off, Fed Fears Mount

The Dow Jones Industrial Average suffered a punishing 613-point decline, marking one of its worst single-day performances this year. The S&P 500 slid 1.2% for its fourth consecutive loss, extending a concerning downtrend that has erased recent gains. The technology-heavy Nasdaq Composite bore the brunt of the selling pressure, dropping 1.7% as investors rotated out of growth-oriented sectors.

This broad-based decline reflects growing investor anxiety about multiple economic headwinds converging simultaneously. The market’s downward trajectory signals a significant shift in sentiment from the optimism that characterized earlier trading sessions. The sustained selling pressure across major indices suggests institutional investors are repositioning portfolios in anticipation of more challenging market conditions ahead.

Technology stocks dominated the sell-off, with semiconductor giant Nvidia falling 3% during the session and now down 10% for the month. The decline in Nvidia, which has been a market leader during the artificial intelligence boom, particularly rattled investor confidence. Amazon and Microsoft also registered substantial declines, contributing significantly to the Nasdaq’s underperformance.

The timing of the tech sell-off coincided with sobering commentary from Alphabet CEO Sundar Pichai, who warned about ‘irrationality’ in the AI sector. His remarks amplified existing concerns about stretched valuations in technology stocks that have rallied aggressively on AI enthusiasm. The convergence of technical selling pressure and fundamental valuation concerns created a perfect storm for technology investors.

Market expectations for Federal Reserve rate cuts underwent a dramatic reversal, with odds falling to 50% from 90% previously. This sharp repricing reflects growing consensus that the central bank may maintain tighter monetary policy for longer than anticipated. The shift in rate expectations directly contributed to the day’s risk-off sentiment, as higher interest rates typically pressure equity valuations.

Investors are now grappling with the possibility that the era of accommodative monetary policy may be ending sooner than expected. The Federal Reserve’s potential hesitation to cut rates suggests ongoing concerns about inflationary pressures, despite recent cooling in some economic indicators. This policy uncertainty creates headwinds for both growth stocks and the broader market.

Beyond technology sector concerns and Federal Reserve policy shifts, several additional factors contributed to the market’s weakness. Home Depot missed earnings expectations, disappointing investors who had been counting on strong consumer spending to support economic growth. The home improvement retailer’s results raised questions about the resilience of the consumer sector.

Losses at Blue Owl Capital added further pressure to financial stocks, while Bitcoin’s volatility mirrored the broader risk aversion. The cryptocurrency initially dropped to $89,259 before recovering near $91,000, demonstrating the flight from risk assets across multiple market segments. This coordinated movement across stocks, cryptocurrencies, and other risk assets indicates a systemic reassessment of risk appetite rather than isolated sector-specific concerns.