North American markets tumble as tech selloff continues and data uncertainty sours sentiment

North America’s main stock indexes fell on Thursday with investors cautious ahead of indications on the U.S. economy and the monetary policy path after President Donald Trump signed a bill ending the longest government shutdown in the country’s history.

Markets and the Federal Reserve, which have been reliant on private sources for clues on economic health in the absence of official data, still expect to face gaps after the White House said employment and some inflation reports for October might never be released.

“There’s a lot of uncertainties about the state of the economy … what we’re going through is a little bit of a correction in the market in the AI sector and we’re seeing market rotation,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“What’s really weighing on investors now is the state of the economy and the prospects of a rate cut in December.”

At 12:25 p.m. ET, Toronto’s S&P/TSX composite index was down 399.62 points, or 1.3 per cent, at 30,429.73, on track to break its longest winning streak in over a month, after Wednesday’s record close powered by metal miners and upbeat Loblaw earnings.

The commodity-heavy index has repeatedly set records this year, supported by higher oil, gold and copper prices amid geopolitical tensions and economic uncertainty.

In New York, the Dow Jones Industrial Average fell 487.04 points, or 1.01 per cent, the S&P 500 lost 87.37 points, or 1.28 per cent, and the Nasdaq Composite lost 443.91 points, or 1.90 per cent.

Information technology stocks and communication services were the biggest drags on the S&P 500. Heavyweights Nvidia and Alphabet lost 4 per cent and 2.5 per cent, respectively. The Magnificent Seven ETF slid 2.3 per cent.

However, Cisco Systems rose 4.5 per cent after the company raised full-year profit and revenue forecasts, betting on demand for its networking equipment.

Technology and AI names have come under pressure lately, with the Nasdaq set for its third straight session of declines, as investors rotated out of pricey tech stocks into traditionally defensive areas such as healthcare.

The Dow has benefited from the rotation, notching back-to-back record highs after lagging the S&P and the Nasdaq this year.

The S&P 500 Value index has gained about 1.6 per cent so far this week, whereas its growth equivalent has dipped 0.3 per cent.

Walt Disney fell 8.8 per cent, weighing on the Dow. The media giant signaled it was grinding for a potentially prolonged fight with YouTube TV over distribution of its cable channels.

Recently, data from payroll processor ADP showed private employers shed over 11,000 jobs a week through late October and Indeed Hiring Lab showed a 16 per cent drop in retail-related job postings in October from a year ago, pointing to continued weakness in the labor market.

Several Fed speakers expressed scepticism over another interest rate cut in December, prompting investors to scale back bets. Comments from more policymakers will be parsed through the day.

Traders are currently pricing in an about 49.6 per cent chance of a 25-basis-point rate cut in December, lower than last week’s 70 per cent, according to CME Group’s FedWatch tool.

Among others, APA Corp gained 5.8 per cent to top the S&P 500 after a report said Spain’s Repsol is considering a reverse merger of its upstream unit with potential partners, including the energy producer.

Memory device makers Western Digital and Sandisk dropped 3.1 per cent and 10.7 per cent, respectively, each after half-yearly results from Japan’s Kioxia Holdings.

Reuters