The S&P 500 faced significant selling pressure on Thursday, closing below the psychologically important 6,800-point level for the first time in weeks. A confluence of disappointing labor market signals and renewed anxiety over soaring capital expenditures in the technology sector prompted a wave of institutional selling.
Tech Sector Reels from Spending Forecasts
A primary driver of the downturn was a sharp reassessment of major technology stocks following recent earnings reports. While Alphabet’s fourth-quarter performance exceeded expectations, its forward guidance triggered investor alarm. Management outlined capital expenditure plans for 2026 in the range of $175 to $185 billion, representing a near-doubling from the prior year. The market’s negative reaction to otherwise solid results stems from growing fears that massive investments in artificial intelligence could pressure profit margins over the long term without generating immediate corresponding returns.
The sector’s woes intensified after the closing bell. Shares of Amazon plummeted approximately 10% in extended trading after the company issued a disappointing profit outlook and signaled potential investments of up to $200 billion.
Labor Market Data Disappoints
Market sentiment soured early in the session following the release of weaker-than-expected US labor market figures. Initial jobless claims came in at 231,000, well above the forecast of 212,000. Simultaneously, announced job cuts for January reached 108,000, marking the highest level for that month since 2009. This loss of momentum in the employment landscape undermined the optimism that had recently fueled the market.
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Defensive Rotation and Technical Damage
As technology and consumer discretionary stocks sold off heavily, capital flowed into defensive sectors. Notable movers included:
– McKesson: Shares surged 16.5% following robust operational results.
– Hershey: The stock advanced 9.0%, serving as a classic defensive safe haven.
– Estée Lauder: Shares collapsed 19.2% as warnings over potential new tariffs overshadowed otherwise solid quarterly earnings.
From a technical perspective, the S&P 500’s close at 6,798.40 points represents a loss of important ground. Traders are now focusing on the next key support level at 6,675 points. The broad nature of the sell-off is further evidenced by the index trading only 1.62% above its 200-day moving average.
Outlook for Friday’s Session
A weak opening is anticipated for Friday’s trading as the market continues to digest the negative after-hours signals from Amazon. A failure for the index to hold the 6,675-point level could trigger further automated selling, potentially pushing the benchmark toward its 200-day moving average, which currently sits at 6,689.82 points.
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