Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
U.S. stock markets experienced a significant downturn on Thursday, November 6, 2025, with major indices including the Nasdaq Composite, S&P 500, and Dow Jones Industrial Average all registering sharp declines. The selloff was primarily driven by escalating concerns over inflated valuations within the artificial intelligence (AI) sector, compounded by bleak October jobs data that revealed the highest number of layoffs since 2003.
Market Performance and AI Valuation Concerns
The tech-heavy Nasdaq Composite led the market’s decline, dropping 1.6%, while the S&P 500 slid 0.9% and the Dow Jones Industrial Average fell nearly 0.8%. Traders indicated that the declines reflected a rapid shift in market sentiment, as investors increasingly questioned whether the AI boom had pushed valuations beyond reasonable levels.
Several prominent technology companies were heavily impacted. Qualcomm shares plunged over 4% despite strong quarterly earnings and upbeat guidance, as investors deemed the outlook insufficient to justify its valuation. Chipmakers Nvidia and AMD also saw significant drops, losing more than 2% and 6% respectively. Duolingo was a notable casualty, plummeting over 25% after its AI-focused presentation failed to inspire investor confidence and its fourth-quarter bookings forecast missed estimates.
Weakening Labor Market Data
Adding to the market’s unease, the latest report from Challenger, Gray & Christmas revealed a substantial increase in job cuts. Employers announced 153,074 layoffs in October, nearly triple the figure from the same month a year prior and marking the worst October for job cuts since 2003. Cumulatively, U.S. companies have announced 1,099,500 job cuts in the first ten months of 2025, a 44% increase compared to the total for 2024. Technology companies were at the forefront of these reductions, signaling a broader restructuring trend driven by cost discipline and automation.
While ADP Research reported a modest increase of 42,000 private payrolls in October, ending a streak of job losses from August and September, this small gain did little to alleviate fears of a weakening economy.
Broader Economic and Political Headwinds
The ongoing federal government shutdown, now in its 37th day, contributed to market uncertainty by delaying crucial economic data releases. In response, the Federal Aviation Administration (FAA) ordered a 10% reduction in flights at 40 major airports due to unpaid air traffic controllers, causing further disruptions and impacting airline stocks such as Delta and Southwest.
Elsewhere, the Supreme Court heard arguments regarding the legality of President Trump’s sweeping trade tariffs. Several justices expressed skepticism about the policy’s broad scope, raising the possibility of a partial rollback that could reshape global trade flows. Treasury Secretary Scott Bessent, however, maintained an optimistic outlook on the administration’s position.
Attention was also focused on Tesla, where shareholders were voting on CEO Elon Musk’s proposed trillion-dollar pay package. The decision carried significant implications for the company’s leadership stability and the broader “Magnificent Seven” tech stocks that have largely driven this year’s market rally.
Commodities and Market Outlook
In commodities, Saudi Aramco cut oil prices for Asian buyers to their lowest level in 11 months, signaling a bearish outlook on global demand amid increasing supply and potential OPEC+ production adjustments. Brent crude slipped 0.4% to $62.96 a barrel, reflecting expectations of a global oil glut by 2026.
The convergence of AI valuation concerns, deteriorating labor market data, and various policy uncertainties created a cautious mood among investors. Analysts cautioned that if weakness in the Big Tech sector deepens and economic indicators continue to disappoint, the market’s year-end optimism could quickly dissipate, potentially leading to a volatile November for U.S. stocks.
