(Feb 13): US equities reversed earlier gains mid-morning on Thursday as a slump in the technology sector offset gains elsewhere, even as investors and strategists saw signs of stabilisation in the US labour market.
The S&P 500 Index erased earlier gains to trade 0.4% lower at 10.54am in New York, with technology names, including Cisco Systems Inc, Apple Inc and Microsoft Corp, leading the decline. Cisco fell as investors are concerned hardware and memory-chip prices are weighing on the company’s outlook. Real estate and industrials outperformed.
The tech-heavy Nasdaq 100 Index fell 0.9%, while the Dow Jones Industrial Average was little changed after hitting record highs with the support of transportation stocks.
“AI might be boosting the economy thanks to massive capex investments and productivity enhancements but it’s becoming a net negative for the stock market,” said Vital Knowledge founder Adam Crisafulli.
Initial jobless claims decreased last week, while continuing claims climbed to 1.86 million.
See also: Real estate services stocks sink in latest ‘AI scare trade’
“The labour market headline numbers appear strong with a lower unemployment rate and better-than-expected job gains,” said Mark Malek, chief investment officer at Muriel Siebert & Co. However, he said data shows it is “quietly losing momentum beneath the surface”.
Overnight, the US House of Representatives voted to roll back some of US President Donald Trump’s tariffs on Canada with support of six Republicans as anxiety grows over the administration’s economic policies ahead of the midterm elections. In Toronto, the S&P/TSX Composite Index slipped 0.7%, tracking US stocks lower.
“Against this backdrop, a Supreme Court decision on tariffs, which could come as early as the 20th, could have far-reaching market implications,” said Karl Schamotta, chief market strategist at Corpay. He said a decision by the court may force the White House to “rely on narrower legal avenues” to implement tariff plans.
See also: Treasuries fall as strong jobs curb Fed-cut bets
Still ahead in economic data this week, traders will parse an inflation report on Friday for additional clues on the Federal Reserves interest rate path.
Earnings calls due after markets close on Thursday include Coinbase Global Inc and Applied Materials Inc.
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