United States benchmark averages closed lower on Thursday (Friday AEDT) as investor anxiety mounted over the disruptive effects of artificial intelligence, with concerns spreading across technology, transport, financial and real estate stocks.
The Dow Jones Industrial Average fell 669.2 points or 1.3% to 49,452.0, the S&P 500 declined 108.7 points or 1.6% to 6,832.8, and the Nasdaq Composite slid 469.3 points or 2% to 22,597.2 as the sell-off intensified in growth sectors.
Markets have spent much of the past year celebrating the productivity and profit potential of artificial intelligence. However, attention has increasingly turned to the risks associated with rapid AI adoption, including competitive upheaval, margin compression and the prospect of higher unemployment across affected industries.
A lacklustre quarterly update from Cisco Systems dampened sentiment in the technology sector and triggered broader weakness, with shares tumbling 12.3% during Thursday's session.
Financial stocks also came under pressure, with Morgan Stanley down 4.9%, hit by fears that AI-powered tools could disrupt wealth management and advisory services.
Transport and logistics names suffered some of the steepest losses. Shares of C.H. Robinson plunged 14.5% amid growing speculation that new AI-driven freight optimisation tools could streamline supply chains and reduce the need for traditional intermediaries.
Landstar shed 15.6%, and Expeditors International also tumbled 13.1%.
Concerns were fuelled in part by reports of a new AI tool developed by Algorhythm Holdings, which has reportedly heightened investor scrutiny of trucking and logistics business models.
The anxiety extended to the property sector. CBRE lost 8.8% and SL Green Realty declined 4.8% as investors considered the potential knock-on effects of rising unemployment on demand for office space.
AppLovin marked the largest percentage decline on the day after the marketing platform reported fourth-quarter results. The stock has faced sustained pressure this year amid intensifying competition.
Elsewhere, personal computer makers retreated after China’s Lenovo warned of shipment pressures linked to a memory-chip shortage. The update weighed on HP, down 4.5%, and Dell Technologies which fell 9.1%.
Mega-cap names also suffered losses as Apple shed 5%, Nvidia dipped 1.6% and Amazon.com lost 2.2%.
Earnings season has revived debate over the scale of capital expenditure linked to the AI arms race. Amazon, Google, Meta and Microsoft are collectively expected to spend around US$650 billion (A$913 billion) this year as they compete for AI dominance.
Investors rotated into traditionally safer segments of the market. Walmart shares rose 3.8% to a record closing high, while Coca-Cola gained 0.5%.
The latest session followed a weaker close the previous day, when an early rally driven by a stronger-than-expected jobs report faded.
Although headline employment data appeared resilient, economists questioned whether it marked the start of a sustained acceleration in hiring. Revisions within the report suggested zero net job growth during the second half of 2025, tempering optimism about labour market momentum.
On Thursday, fresh data showed that the number of Americans filing new applications for unemployment benefits declined less than expected. Initial claims for state unemployment benefits fell by 5,000 to a seasonally adjusted 227,000 in the week ended 7 February, according to the Labor Department.
Economists had forecast 222,000 claims.
The modest drop reversed only a small portion of the previous week’s increase, which had been attributed to severe winter weather and seasonal volatility around year-end.
With volatility elevated, traders are now turning their focus to a key inflation reading due on Friday (Saturday AEDT). Economists expect January’s consumer price index to rise 0.3% on both a headline and core basis, the latter excluding food and energy.
On the bond markets, 10-year and 2-year rates were down 1.8% and 1.6% to 4.098% and 3.456%, respectively.
