• Major U.S. indexes post worst start to a month since April as political stalemate continues
  • Technology and semiconductor stocks lead declines amid largest Nasdaq 100 outflows since dot-com era
  • Consumer sentiment hits lowest level since June 2022 as government shutdown disrupts economic data

U.S. stocks extended their decline Thursday, with the Nasdaq Composite falling 1.00 percent, as the ongoing federal government shutdown and souring sentiment toward technology stocks continued to rattle markets. The selloff marks the worst start to a month since April for U.S. equities.

The technology-heavy index's decline was particularly pronounced, driven by significant outflows from technology and semiconductor stocks. Exchange-traded funds tracking the Nasdaq 100 experienced their largest two-day outflows since the dot-com collapse in 2000, according to market data.

Market participants point to the government shutdown, now in its second month, as a primary driver of the volatility. The political impasse has disrupted the release of critical economic indicators, including retail sales and jobs data, creating uncertainty for investors and corporations alike. "The lack of economic data is making it difficult to assess the true health of the economy," said one portfolio manager who asked not to be named discussing market conditions.

The University of Michigan's consumer sentiment index dropped to its lowest level since June 2022, indicating growing economic anxiety among consumers across most demographic groups. The notable exception was households with significant stock holdings, whose sentiment actually improved thanks to prior market gains.

Technology stocks bore the brunt of the selling pressure as sentiment toward AI-exposed companies turned more cautious amid high valuations. Several large institutional investors have been rotating out of big tech positions, with SoftBank recently liquidating its Nvidia position to pivot toward new investments, according to people familiar with the matter.

Efforts to resolve the government funding impasse have hit repeated obstacles, with lawmakers showing little progress toward a compromise. Market analysts warn that if the shutdown extends toward Thanksgiving, it could trigger a more severe market correction and potentially reduce annualized fourth-quarter GDP growth by over a percentage point.

Airline disruptions and other direct consequences of the shutdown are beginning to affect corporate earnings expectations, though the full impact remains difficult to quantify without normal government data flows. Companies across multiple sectors have begun warning about potential earnings impacts in their forward guidance.

While technology sector layoffs have become more visible recently, total layoffs in the sector remain down compared to last year. The focus has shifted to labor-market health and corporate cost-cutting as economic growth shows signs of slowing.

Market technicians note that the S&P 500 has broken below several key technical support levels, potentially opening the door to further declines. Trading volume has been elevated throughout the week, suggesting institutional repositioning rather than retail-driven selling.

Attempts to reach representatives from major technology firms for comment on the market movements were unsuccessful Thursday afternoon. A Treasury Department spokesperson declined to comment on market conditions, citing the ongoing government funding situation.

Correction: An earlier version of this article misstated the timing of the consumer sentiment data release. The University of Michigan's index was released this week.