U.S. stocks dove on Thursday as continued pressure on Big Tech and troubling labor data reignited fears about stretched valuations and slowing growth. The Nasdaq Composite (IXIC) dropped 1.9%, leading the declines, while the S&P 500 (GSPC) fell 1.2% and the Dow Jones Industrial Average (DJI) shed 0.8%. A weak private-sector jobs report and mounting concerns about corporate layoffs sent investors fleeing from risk assets after a short-lived midweek rebound.
Market Movers:
- Duolingo (DUOL) -27% — Shares fell sharply after the company’s AI-driven product pitch failed to convince investors, and its Q4 bookings outlook came in below expectations. Despite beating Q3 sales estimates, Duolingo lowered guidance to $329.5M–$335.5M, signaling slower user growth.
- e.l.f. Beauty (ELF) -21% — The cosmetics company slid after issuing fiscal 2026 guidance that pointed to shrinking profit margins, overshadowing strong revenue growth. Adjusted EPS projections of $2.80–$2.85 fell well below Wall Street’s $3.53 estimate, raising concerns about tariff-related cost pressures.
- TransAlta (TAC) -20% — Shares sank after the utility announced the planned retirement of CEO John Kousinioris, effective in 2026. The leadership transition, coupled with a widened quarterly loss, spooked investors despite stable operations.
- Datadog (DDOG) +20% — The cloud monitoring firm surged after delivering a major earnings beat and raising full-year guidance. Q4 revenue is now expected between $912M and $916M, well above forecasts, with margins improving as enterprise demand for AI observability tools expands.
- Fastly (FSLY) +17% — Shares jumped after the edge-cloud platform posted better-than-expected quarterly results and raised its full-year revenue outlook. Management highlighted progress in scaling growth and profitability, signaling a stronger phase of operational execution.
- Snap (SNAP) +17% — The social media firm rallied after posting upbeat Q3 results and announcing a $400M AI partnership with Perplexity. The integration will bring Perplexity’s answer engine into Snapchat by 2026, a move investors see as positioning Snap for long-term AI-driven engagement growth.
Tech Stocks Drag Markets Lower
Despite strong results from several mid-cap tech names, megacaps continued to weigh on the broader market. Nvidia (NVDA) fell more than 3%, while AMD (AMD) dropped nearly 7% as investors questioned whether the sector’s lofty valuations can be justified amid slower AI spending growth. Qualcomm (QCOM) also dipped 3% despite beating earnings expectations, as a $5.7B non-cash charge linked to new tax rules overshadowed upbeat guidance.
The losses showed investors’ unease with the “Magnificent Seven” stocks that have fueled much of 2025’s market gains. With Treasury yields stable but economic signals softening, traders rotated out of high-valuation tech in favor of defensives and value names.
Job Data Adds to Recession Fears
Fresh signs of labor market strain deepened the market’s pullback. Challenger, Gray & Christmas reported that October marked the worst month for layoffs since 2003, stoking fears that the slowdown in hiring is spreading beyond tech. The data contrasted sharply with recent ADP payroll figures that had hinted at a rebound earlier in the week, fueling confusion about the true state of the economy.
Economists warned that persistent layoffs could undercut consumer spending and complicate the Federal Reserve’s balancing act. Markets remain divided on whether the Fed will follow through with a December rate cut, with futures now pricing in just a 45% chance, down from 60% earlier this week.
Policy and Geopolitical Tensions Simmer
In Washington, the Supreme Court heard arguments on the legality of President Trump’s broad tariff powers, a ruling that could reshape global trade policy. Several justices signaled skepticism of the current framework, potentially setting the stage for a significant rollback of tariffs that have disrupted international commerce.
Meanwhile, the federal shutdown entered its 37th day — the longest in history — forcing the FAA to slash flight capacity by 10% at 40 airports amid unpaid staff shortages. The disruptions added to logistical strain for airlines and travelers ahead of the holiday season, with ripple effects expected across supply chains.
Looking Ahead
Investors will watch closely for Friday’s nonfarm payrolls report for clearer insight into labor trends after a volatile week of mixed signals. Earnings season also continues, with Warner Bros. Discovery (WBD), Moderna (MRNA), and Airbnb (ABNB) among the next major names set to report. With valuations stretched and job concerns rising, volatility may remain elevated as markets look for stability in both economic data and Washington’s policy direction.
