WASHINGTON (dpa-AFX) - Following the rally seen in the previous session, stocks showed a substantial move back to the downside during trading on Thursday. The major averages all moved sharply lower, more than offsetting yesterday's gains.
The major averages ended the day just off their lows of the session. The Nasdaq nosedive 1,421.52 points or 5.5 percent to 24,315.00, the S&P 500 plummeted 334.89 points or 4.4 percent to 7,353.73 and the Dow plunged 1,833.06 or 3.4 percent to 51,523.06.
The sharp pullback on Wall Street came amid a renewed sell-off in the tech sector, with the tech-heavy Nasdaq plummeting into contraction territory and hitting its lowest closing level in over six months.
Lingering concerns about the sustainability of the artificial intelligence trade continued to weigh on the tech sector.
Following Democrats' takeover of both houses of Congress in Tuesday's midterm elections, some traders are worried about the possibility of tighter AI regulation.
'Despite yesterday's relief rally on Wall Street, investors remain cautious about elevated technology valuations and whether substantial AI spending can generate sufficient returns,' said Daniela Hathorn, Senior Market Analyst at Capital.com.
Semiconductor stocks showed a particularly steep drop on the day, resulting in a 12.3 percent nosedive by the Philadelphia Semiconductor Index. The index tumbled to a nearly seven-month closing low.
Considerable was is also visible among computer hardware stocks, as reflected by the 10 percent plunge by the NYSE Arca Computer Hardware Index.
Outside of the tech sector, financial stocks are also seeing significant weakness, with the NYSE Arca Broker/Dealer Index tumbling by 4.3 percent and the KBW Bank Index slumping by 3.6 percent.
Transportation, energy and healthcare stocks also showed notable moves back to the downside, while gold stocks were among the few groups to buck the downtrend.
In U.S. economic news, the Labor Department released a report on Thursday showing an unexpected decline in first-time claims for U.S. unemployment benefits in the week ended October 31st.
The Labor Department said initial jobless claims fell to 189,000, a decrease of 6,000 from the previous week's revised level of 195,000.
Economists had expected jobless claims to inch up to 196,000 from the 194,000 originally reported for the previous week.
With the unexpected dip, jobless claims matched the multi-decade low of 189,000 set in the week ended July 18th.
On Friday, the Labor Department is scheduled to release its more closely watched report on the employment situation in the month of October.
Economists currently expect employment to increase by 62,000 jobs in October after rising by 29,000 jobs in September, while the unemployment rate is expected to hold at 4.2 percent.
In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance on Thursday. Japan's Nikkei 225 Index tumbled by 1.8 percent, while Hong Kong's Hang Seng Index soared by 3.7 percent.
The major European markets also ended the day mixed. While the French CAC 40 Index rose by 0.3 percent, the German DAX Index and the U.K.'s FTSE 100 Index both fell by 0.4 percent.
In the bond market, treasuries showed a strong move to the upside over the course of the session amid the sell-off on Wall Street. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slumped 5.7 basis points to 4.837 percent.
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