On Friday, S&P futures declined following market’s most significant downturn in over a month. Futures associated with the Dow Jones Industrial Average experienced a decline of 214 points, equating to a decrease of 0.5%. S&P futures declined by 0.6%, whereas Nasdaq 100 futures fell by 1%. Nvidia and AMD experienced a decline of approximately 2% in the premarket session. Meta Platforms and Microsoft experienced a decline. On Thursday, major U.S. indexes experienced their most significant one-day decline since October 10. The Dow experienced a decline of approximately 800 points, reversing the gains observed in Wednesday’s session when it surpassed the 48,000 mark.

Technology giants faced significant challenges in the previous session, leading the tech-heavy Nasdaq Composite to potentially end its seven-week winning streak. This week has seen a significant escalation in concerns surrounding the artificial intelligence trade, particularly following the recent decline of Oracle, a previously high-flying cloud stock. This development has heightened investor anxiety regarding inflated technology valuations, a substantial increase in debt financing, and escalating capital expenditure plans related to AI. Indeed, Oracle’s growth is distinctly more dependent on its cloud agreement with OpenAI, and the company possesses significantly less cash in comparison to hyperscalers. “We observed the events that transpired in 2021. Those stocks got destroyed; everything was okay for a while, and then it turned out that the rest of the market had more of a reset to do as well,” stated Yung-Yu Ma on Thursday.

“I believe that a significant portion of the market is supported by the AI trade. This pullback appears to be a constructive adjustment in the market. The market exhibits a dynamic interplay, characterized by a reset in investor sentiment alongside numerous instances of failed breakouts and deteriorating charts. And that does take a while to rebuild.” Growing apprehension regarding the Federal Reserve’s imminent interest rate decision further exerted pressure on the market on Thursday. Market participants are currently estimating a probability of approximately 52% that the central bank will reduce its benchmark overnight borrowing rate by a quarter percentage point at the upcoming December meeting. This figure represents a decline from the 62.9% likelihood observed just one day prior and a significant drop from the 95.5% chance recorded a month earlier, according to the reports.

The recent U.S. government shutdown, marking the longest duration on record, concluded Wednesday evening after extending beyond six weeks. The anticipated development was expected to conclude a phase during which investors were functioning without critical economic data. Rather, it has prompted additional inquiries. Karoline Leavitt indicated that certain economic data scheduled for release amid the impasse may not see the light of day. Currently, a segment of investors believes this could lead the Federal Reserve to be less willing to lower interest rates. Week to date, the S&P 500 has increased approximately 0.1%, while the 30-stock Dow has risen by 1%. Meanwhile, the Nasdaq has experienced a decline of nearly 0.6% this week.