U.S. stocks fell sharply on Thursday as growing concerns over the disruptive impact of artificial intelligence weighed on investor sentiment. Market participants increasingly questioned how the rapid AI buildout could upend entire industries, pressure profit margins, and potentially drive higher unemployment.
The Dow Jones Industrial Average dropped 669.42 points, or 1.34%, closing at 49,451.98. Losses were led by Cisco Systems, which plunged 12% after issuing weaker-than-expected guidance for the current quarter. The S&P 500 declined 1.57% to finish at 6,832.76, while the Nasdaq Composite slid 2.03% to 22,597.15.
Several segments of the market have come under pressure this year following the release of AI tools seen as capable of replicating or significantly reshaping traditional business models.
Financial names such as Morgan Stanley weakened amid fears AI could disrupt wealth management operations. In the transportation space, shares of C.H. Robinson sank 14% on concerns that AI-driven efficiencies in freight operations may erode revenue streams.
Real estate stocks were also affected. Companies including CBRE and SL Green Realty declined on speculation that higher unemployment could dampen demand for office space.
Software stocks, already pressured by disruption fears in recent weeks, extended their year-to-date losses. Palantir Technologies fell nearly 5%, bringing its 2026 decline to more than 27%. Autodesk dropped close to 4%, deepening its yearly slide to roughly 24%. The iShares Expanded Tech-Software Sector ETF lost nearly 3% and now sits about 31% below its recent high after entering bear market territory last month.
Adding to the risk-off tone, silver prices retreated sharply. Silver futures tumbled 10%, unwinding what had been a popular retail trade this year.
Investors rotated into defensive sectors, lifting shares of Walmart and Coca-Cola, which rose 3.8% and 0.5%, respectively. Consumer staples and utilities led sector gains, each advancing more than 1%, with staples reaching a record close.
The downturn followed a choppy prior session, where an early rally fueled by a strong jobs report faded. Economists questioned whether the data signaled a sustained rebound in payroll growth, particularly after revisions showed no job growth in the second half of 2025.
Traders are now turning their attention to Friday’s key inflation report. Economists surveyed by Dow Jones expect January’s CPI to rise 0.3% on both a headline and core basis.
Overall, U.S. equities closed decisively lower, with major benchmarks posting broad-based losses amid escalating AI-related disruption concerns.
