• The Nasdaq Composite index fell 1%, leading a broader market selloff driven by significant weakness in technology and financial shares.
  • A cautious tone from the Federal Reserve regarding the timeline for interest rate cuts and weak consumer sentiment data soured investor mood.
  • The S&P 500 also declined, while the Health Care sector emerged as a rare bright spot, gaining 1.7% as investors sought defensive positions.

U.S. equity markets deepened their losses Thursday, with the tech-heavy Nasdaq Composite closing down 1% as a selloff in chip stocks and renewed anxiety over the Federal Reserve's policy path spooked investors. The decline marks a continuation of the week's bearish trend, erasing more of the gains from the record highs set earlier this year.

The Nasdaq fell 87.69 points to settle at 21,622.98, according to final exchange data. The broader S&P 500 wasn't spared, losing 0.3%, while the Dow Jones Industrial Average managed to tread water, ending the session nearly flat. The selling pressure was broad-based but particularly acute in the Technology and Financials sectors, which dropped 0.8% and 1.0%, respectively. The only sector to post meaningful gains was Health Care, which climbed 1.7% as money rotated into more defensive plays.

The market's sour mood was fueled by a confluence of factors. Comments from a Federal Reserve official, who spoke on condition of anonymity to discuss policy outlook, cautioned that the central bank remains data-dependent and is in no rush to cut rates, dousing hopes for imminent monetary easing that had buoyed markets. This was compounded by the latest consumer sentiment reading, which came in weaker than some economists had projected, stoking concerns about the resilience of the U.S. consumer amid persistent inflation.

Efforts to reach spokespeople at several major asset managers for comment on the day's moves were not immediately successful. The selloff occurred despite a separate report showing initial jobless claims dipped slightly, underscoring that the still-tight labor market is doing little to assuage broader economic anxieties for now. With volatility picking up, traders are bracing for more turbulence until there is clearer direction from the Fed on rates and more concrete signs that inflation is decisively cooling.