• The Nasdaq dropped roughly 1% in intraday trading, extending losses amid selling pressure in technology and AI-related stocks.
  • The S&P 500 and Dow Jones also trended lower, tracking risk aversion as macro concerns weigh on sentiment.
  • Defensive sectors outperformed, reflecting a cautious tone among investors ahead of key earnings and Fed guidance.

U.S. equities slid further on Thursday, with the Nasdaq Composite falling about 1% by midday, as tech and high-growth names bore the brunt of selling pressure. The broader S&P 500 and Dow Jones Industrial Average also declined, though at a more tempered pace, as investors grappled with renewed concerns over interest rates and valuations.

The drop was led by semiconductor and AI-related stocks, which have been sensitive to shifts in rate expectations. According to traders, the move reflects a cautious mood ahead of upcoming earnings reports and Federal Reserve communications. Defensive sectors, including utilities and consumer staples, held up relatively better, typical of a risk-off environment.

"We're seeing a classic rotation out of growth into value and defensives," said a portfolio manager at a large asset manager. "There's a lot of uncertainty around the path of rates and the sustainability of AI-driven earnings."

The selloff comes amid a backdrop of lingering inflation fears and geopolitical tensions, though no single catalyst was cited for Thursday's move. Analysts noted that the Nasdaq has been particularly vulnerable to profit-taking after a strong rally earlier this year.

Efforts to reach a broader consensus on market direction remain elusive. Some strategists argue that the decline is a healthy correction, while others warn of further downside if macro headwinds persist. "The market is in a wait-and-see mode," said a market strategist. "Without clear catalysts, we could see more choppiness."

Looking ahead, investors will focus on upcoming corporate earnings from major tech firms and the Fed's next policy meeting. Data on GDP and inflation are also on the docket, which could provide clues on the economic trajectory.

Shares of Broadcom and Nvidia were among the hardest hit, falling more than 2% each, though both companies have declined to comment on the day's trading. The broader semiconductor index also dropped, reflecting sector-wide weakness.

Despite the pullback, long-term bulls remain optimistic about AI demand and capital expenditure cycles. "The fundamental story hasn't changed," said a tech analyst. "But near-term, we need more clarity on rates and earnings."