Dow Jones Industrial Average drops 400 points as AI selloff continues

• The Dow Jones shed weight on Thursday as the AI rally withers further.
• The US government shutdown has officially become the longest in US history.
• Private data sets, in the absence of official data, are pointing to potential problems.

The Dow Jones Industrial Average (DJIA) tumbled 400 points on Thursday, falling to its lowest valuation in nearly two weeks as equity indexes were crushed underfoot by a broad pivot out of AI tech stocks. US economic data is restricted to volatile private datasets amid the ongoing federal government closure, causing investors to fret about wonky release figures that have a poor historical correlation to large-scale government data collection and reporting.

Overextended AI stock declines drag down broader market

The Dow Jones is back below the 47,000 handle, down around 2.6% peak-to-trough after posting record highs just above 48,000 at the end of October. A general decline in tech stocks is getting a fresh look on Thursday following an initial selloff and brief recovery through the middle of the week. Salesforce (CRM), Nvidia (NVDA), and Microsoft (MSFT) are all in the red for the day as investors begin to take a closer look at whether sky-high valuations and forward P/E ratios measured in centuries for data center tech suppliers can continue to be justified in the face of still-mythical revenue generation from AI projects.

US job losses accelerate, fraying investor nerves

US Challenger Job Cuts showed a net loss of a little over 153K employment positions in October. This marks the highest Challenger figure reported since April of this year, when the Trump administration formally announced its widespread tariff strategy that would take months and several delays to enact. Excluding the Covid pandemic era, this marks the second-worst Challenger Job Cuts print since data collection and reporting began.

The US government shutdown has officially entered the record books as the longest federal closure in US history, highlighting President Donald Trump's past statements that the President, regardless of who it is, is singularly responsible for government shutdowns and is solely responsible for ending them as quickly as possible. With the US government on ice, official datasets have gone dark, pushing investors into over-reliance on private data sources that tend to have a tenuous, volatile relationship with smoothed, large-scale official collections from government sources.

Dow Jones daily chart