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Sterling rises as BoE rates remain unchanged, but stocks fall due to tech shares

The major stock indexes dropped sharply Thursday. Consumer discretionary and technology shares led the losses in the S&P 500. Meanwhile, the British pound strengthened after the Bank of England decided against a rate cut.

S&P 500 & Nasdaq both declined by more than 1%.

The pound rose 0.64%, to $1.3132. The BoE Monetary Policy Committee, in anticipation of possible tax increases in UK Chancellor Rachel Reeves budget due later this month (later this month), voted by 5-4 to maintain the benchmark bank rate for the central bank at 4.0%. This close vote maintained expectations of a reduction before the end of the year.

Investors on Wall Street continue to focus their attention on the stretched valuations of stocks, the U.S. shutdown, trade tariff rulings and the avalanche of corporate earnings. Consumer discretionary dropped 2.5%, while the S&P 500 Technology index fell 2%. The Philadelphia SE Semiconductor Index fell 2.4%.

Qualcomm shares fell by 3.6% in the U.S. after

Warning

Samsung's future gadgets may not have as many chips as they used to.

This earnings season will not be defined by the past. "The market is looking for guidance, and with tariffs and the shutdown, and perhaps peak AI, it could be a bleak future," said Jake Dollarhide. He is the chief executive officer at Longbow Asset Management, located in Tulsa.

Investors are concerned about stock prices that have risen too high, especially those of momentum shares related to artificial intelligence. Some U.S. chief executives of banks warned earlier this week about a possible market pullback.

The Dow Jones Industrial Average dropped 398.70, or 0.84% to 46,912.30. The S&P 500 declined 75.97, or 1.12% to 6,720.32. And the Nasdaq Composite was down 445.80, or 1.90% to 23,053.99.

The MSCI index of global stocks fell by 5.89 points or 0.59% to 992.00.

The STOXX 600 Index fell by 0.7%.

Shares

Legrand

The French data center equipment company plunges after

reported sales growth

The U.S. has hit the economy hard, with a decline of 11.9% for the first nine month of this year.

Tariffs

Investors digested a Challenger, Gray & Christmas report that revealed employers in the United States cut more than 150.000 jobs in October, which was the largest reduction for more than 20 year. Investors have been attracted to private economic data in the absence of official statistics during the longest government shutdown ever experienced by the United States.

The dollar dropped after weak U.S. employment data raised market expectations that the Federal Reserve would cut rates again this year.

The dollar fell 0.42%, to 99.70, against a basket containing major rivals. The euro gained 0.49% versus the dollar, reaching $1.1547.

Investors were concerned about the U.S. labor market, and the uncertainty caused by the U.S. shutdown.

Benchmark yields on 10-year and 2-year bonds both fell by seven basis points, to 4,089% and 3,562% respectively.

Earlier, euro zone benchmark Bund

Yields

After the BoE's decision, they dropped from their high of four weeks. Germany's 10-year bond yields are down by 2 basis points to 2.65%, after reaching 2.676% at the start of the session. This is the highest level seen since October 10.

Oil prices

Investors weighed the potential glut of supply. U.S. crude oil fell 17 cents, settling at $59.43 per barrel. Brent dropped 14 cents, settling at $63.38.

(source: Reuters)