US Market Crash: Dow Jones falls 800 points, rotation out of tech stocks continues

Benchmark indices on Wall Street had their worst day in a month as profit booking emerged after the end of the longest government shutdown in history.

The Dow Jones fell 800 points on Thursday, snapping a four-day winning run, cooling off from the record high levels hit earlier in the week, and give up nearly 60% of that four-day rally. Rotation out of tech stocks continued as well with the S&P 500 declining over 1.5% and the Nasdaq closing over 2% in the red. With Thursday's fall, the Nasdaq is now down in five out of the last six sessions.

Sentiments around AI-linked stocks are turning cautious with Oracle, which in September, surged 36% in a single day after a deal with OpenAI, has given up all of those gains. Thursday's action was typical of a "buy-the-rumour-sell-the-news" phenomenon.

With the shutdown now coming to an end, Wall Street braces for a barrage of economic data. The Bureau of Labor Statistics will soon release a calendar for the data releases. However, the White House has clarified that the jobs data for October will be reported without details of unemployment as data collection did not take place during the shutdown. There has been no official word from the BLS on this.

There was also caution on the street as hopes of a Fed rate cut next month Faded further. At least five different Fed officials, in different speeches during the course of the week, have either said that its too early to decide whether rates should be cut, or have explicitly refused to vote "yes" for a rate cut proposal on December 10.

According to the CME Fedwatch, the probability of the Fed cutting by 25 basis points in December is now down to 51% from 61% earlier this week.

The sell-off in risk assets also hurt cryptocurrencies, with Bitcoin falling below the mark of $1,00,000, the lowest since May. The world's biggest cryptocurrency is now down 20% from its October peak.

“It’s an expensive market and expensive markets need lower rates to help justify today’s elevated valuations,” said Matt Maley at Miller Tabak + Co. “So, the idea that this could change quickly with so much data coming out all at once, this uncertainty is raising some fear in the marketplace.”

The US Dollar index is back down towards the mark of 99 but Gold prices continue to remain firm around the $4,200 an ounce mark, despite hopes fading of a Fed rate cut.