US Stocks Plunge, Tech Sector Leads Losses Amid Rising Layoffs and Economic Uncertainty

US stock markets reversed mid-week gains on Thursday, with major indices closing lower. The Dow Jones Industrial Average fell by approximately 400 points, and the S&P 500 dropped over 1%. The Nasdaq Composite was the biggest loser, declining by 1.9%, marking its worst week since April. The Cboe Volatility Index (VIX), a measure of market fear, surged by over 8%.

Technology stocks were at the forefront of the sell-off. Qualcomm, Advanced Micro Devices (AMD), Tesla, Palantir Technologies, Meta Platforms, and Nvidia experienced declines ranging from 3% to 7%. Qualcomm's shares fell despite reporting better-than-expected earnings, reportedly due to concerns about losing future business with Apple Inc.

Economic sentiment was further strained by data on job cuts. Challenger, Gray & Christmas reported over 1.53 lakh layoffs in October, nearly triple September's figures and 175% higher year-on-year, marking the worst October for layoffs in 22 years and putting the year on track to be the worst for job cuts since 2009. Initial jobless claims also rose to 2.28 lakh last week.

The increased layoff data led to a higher probability of a 25 basis points rate cut by the Federal Reserve in December, climbing to 71% from 61%.

The ongoing US government shutdown, now the longest in history at 38 days, prompted the Federal Aviation Administration (FAA) and the US Department of Transportation to announce a 10% reduction in flight capacity, causing major airlines to cancel approximately 400 flights.

In other news, drugmakers Eli Lilly and Company and Novo Nordisk A/S agreed with the Trump Administration to cut prices on their popular weight-loss drugs in exchange for a three-year grace period from potential tariffs on pharmaceutical imports.

Impact: This broad market downturn, driven by tech sector weakness and negative economic indicators like rising layoffs, creates a risk-off sentiment that can spill over into global markets. For India, this could mean reduced foreign investment and increased volatility. The signals of economic slowdown and potential Fed rate cuts are closely watched by all markets. The impact on the Indian stock market is estimated to be 7/10 due to sentiment spillover and capital flow sensitivity.

Difficult Terms: - VIX (Cboe Volatility Index): A measure of the stock market's expectation of volatility based on S&P 500 index options. It is often called the 'fear index'. - Initial Jobless Claims: A weekly report showing the number of people filing for unemployment benefits for the first time. - Basis Points: A unit of measure used in finance to describe the percentage change in a financial instrument's value. 100 basis points equals 1%. - Federal Reserve (Fed): The central banking system of the United States. - FAA (Federal Aviation Administration): An agency of the US government responsible for regulating all aspects of civil aviation. - Tariffs: Taxes imposed by a government on imported goods and services.