The Nasdaq Composite plunged 1.68% to 22,678, the S&P 500 fell 1.24% to 6,855, and the Dow Jones Industrial Average dropped 594 points to 49,526 on Thursday, triggering a sharp selloff in major technology stocks. Investors rotated aggressively out of high-growth AI and software names and into cyclical stocks tied to economic growth. As a result, shares of NVIDIA Corporation, Intel Corporation, Netflix, Inc., and Palantir Technologies Inc. came under heavy pressure.
Nvidia closed near $189, down about 0.5% on massive volume of 79 million shares. Intel slid 2.3% to around $47. Netflix dropped nearly 5% to $75.71. Palantir tumbled more than 6% to $127.50, extending recent losses in AI-linked software stocks.
This market move was not random. It was driven by strong U.S. economic data, rising Treasury yield concerns, sector rotation, and uncertainty around Federal Reserve interest rate cuts. The technology sector, especially artificial intelligence and cloud software stocks, is now facing renewed valuation pressure as Wall Street reassesses growth expectations in 2025.
Why US stock market crashes today?
Thursday’s stock market selloff reflected a clear sector rotation. Investors moved money into cyclical stocks such as industrials, financials, energy, and retail. Shares of Walmart rose about 3%, while Boeing gained roughly 2%.
Meanwhile, big-cap technology stocks weakened. The so-called “Magnificent Seven” group saw broad declines. Amazon dropped nearly 3%. Software names were hit even harder.
The iShares Expanded Tech-Software Sector ETF (IGV) fell 3% and is now roughly 32% below its recent high, showing the depth of the correction in software stocks.
Market strategists say this rotation is tied to confidence in a resilient U.S. economy. Stronger growth reduces the urgency for Federal Reserve rate cuts. That shifts investor preference toward companies that benefit from economic expansion rather than long-duration growth stocks priced for future earnings.
Strong U.S. jobs report changes Fed rate cut outlook
A major catalyst behind the stock market volatility was the latest U.S. jobs report. The economy added 130,000 jobs last month, far above expectations. The unemployment rate dipped to 4.3% from 4.4%.
This strong labor market data reassured investors about economic stability. However, it also complicated expectations for Federal Reserve interest rate cuts.
If inflation remains sticky and the labor market stays firm, the Fed may delay rate cuts. Higher interest rates typically hurt high-growth technology stocks because their valuations rely heavily on future earnings discounted at current rates.
That shift in interest rate expectations weighed heavily on AI stocks, semiconductor stocks, and streaming stocks.
Why Nvidia stock is falling today
Nvidia stock is down despite remaining one of the strongest performers in the artificial intelligence boom. The stock trades near $189, well above its 52-week low of $86.62 but below its recent high of $212.
The key issue is valuation sensitivity. Nvidia is viewed as a leading AI chip stock. But when bond yields rise or rate cut expectations fade, investors often trim positions in high-multiple semiconductor names.
The current pullback appears linked to macroeconomic factors rather than company-specific weakness. However, broader AI profit-taking has amplified the move.
Intel stock drops amid semiconductor pressure
Intel stock fell around 2.4% to $47. The broader semiconductor sector weakened as investors rotated into cyclical industries.
Unlike Nvidia, Intel is still in a rebuilding phase. The stock remains below its 52-week high of $54.60. When markets become cautious, companies in transition phases often see sharper selling pressure.
Investors are also watching capital expenditure trends and global chip demand as the AI cycle matures.
Why Netflix stock declined nearly 5%
Netflix shares dropped close to 5% to about $75.71. Growth and streaming stocks tend to trade like long-duration assets. That means they are more sensitive to interest rate expectations.
When Treasury yields climb or rate cuts are pushed further out, streaming stocks and technology platforms often fall.
There was no major company-specific negative headline. Instead, the move reflects broader weakness in high-growth technology stocks.
Palantir stock tumbles as AI software stocks slide
Palantir fell more than 6%, continuing a volatile stretch for AI software names. The company has been seen as a key beneficiary of artificial intelligence spending.
However, concerns about AI-driven disruption across the broader software industry have created uncertainty. Some investors worry that rapid AI innovation could pressure traditional software revenue models.
The stock remains well above its 52-week low of $66.12 but significantly below its 52-week high of $207.52, highlighting the volatility in AI stocks.
The broader software selloff extended beyond Palantir. Networking giant Cisco plunged 11% after issuing disappointing quarterly guidance.
Even companies that reported strong earnings were not immune. AppLovin shares dropped sharply despite beating expectations, reflecting how risk appetite in software stocks has weakened.
This suggests the current selloff is driven more by macro conditions and sector positioning than individual earnings performance.
Investors are now closely watching the upcoming Consumer Price Index (CPI) data. Economists expect headline and core CPI to rise 0.3% month-over-month.
If inflation comes in hotter than expected, it could further reduce the likelihood of near-term Federal Reserve rate cuts. That would likely add more pressure on growth stocks, including AI stocks, semiconductor stocks, and streaming companies.
On the other hand, a softer inflation reading could spark a relief rally in technology stocks.
Bitcoin and broader risk assets also under pressure
Bitcoin traded near $65,738, down about 2.5%. Risk assets broadly have experienced volatility as traders reassess liquidity conditions and monetary policy.
Historical data shows that during previous four-year cycles, Bitcoin has experienced peak-to-trough drawdowns of up to 75%. While it has bounced from recent lows, analysts warn that volatility could continue.
The current market action reflects three powerful forces:
First, a resilient U.S. economy.
Second, uncertainty around Federal Reserve interest rate cuts.
Third, investor rotation from technology stocks into cyclical sectors.
For Nvidia, Intel, Netflix, and Palantir, the selloff appears tied more to macroeconomic shifts than company-specific deterioration.
The broader stock market remains historically strong. The Dow is still near record territory. The S&P 500 remains elevated despite the three-day decline.
However, high-growth technology stocks are adjusting to a new reality. Fewer rate cuts. Higher bond yields. And stricter valuation discipline.
In the near term, inflation data and Federal Reserve signals will likely determine whether this tech stock correction deepens or stabilizes.
