Stocks fall with tech shares; sterling up as BoE keeps rates unchanged

By Caroline Valetkevitch

NEW YORK (Reuters) -Major stock indexes fell sharply on Thursday, with technology and consumer discretionary shares leading losses in the S&P 500, while the British pound firmed after the Bank of England opted against an interest rate cut.

The S&P 500 and Nasdaq each declined more than 1%. 

Sterling strengthened 0.64% to $1.3132. Ahead of likely tax hikes in UK Chancellor Rachel Reeves' budget later this month, the BoE Monetary Policy Committee voted 5-4 to keep the central bank's benchmark bank rate at 4.0%. The close vote kept expectations of a cut before year-end intact.

On Wall Street, investors remain focused on stretched valuations, the U.S. government shutdown, trade tariff legal rulings and the ongoing slew of corporate earnings.

The S&P 500 technology index ended down 2%, while consumer discretionary fell 2.5%. The Philadelphia SE Semiconductor index dropped 2.4%.

Shares of U.S. chipmaker Qualcomm fell 3.6% after warning that its chips might not be as dominant as before in future Samsung gadgets.

"This earnings season is not defined in the rearview mirror. The market wants guidance and right now, with tariffs, the shutdown and possibly peak AI, the future could be bleak," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

Investors are worried about inflated stock prices, particularly from artificial intelligence-related momentum shares. Earlier this week, some U.S. bank chief executives warned about a likely market pullback.

The Dow Jones Industrial Average fell 398.70 points, or 0.84%, to 46,912.30, the S&P 500 fell 75.97 points, or 1.12%, to 6,720.32 and the Nasdaq Composite fell 445.80 points, or 1.90%, to 23,053.99.

MSCI's gauge of stocks across the globe fell 5.89 points, or 0.59%, to 992.00.

The pan-European STOXX 600 index fell 0.7%.

Shares of Legrand plunged after the French data-center equipment firm reported sales growth of 11.9% in the first nine months of the year, slightly below expectations, hit by U.S. tariffs.

Investors also digested a report by Challenger, Gray & Christmas that showed U.S.-based employers cut more than 150,000 jobs in October, marking the month's biggest reduction in more than 20 years.

Economic data from private sources has drawn increased investor interest amid the absence of official data during the U.S. government's longest-ever shutdown.

The dollar fell after the weak U.S. labor data increased market expectations of another Federal Reserve rate cut this year.

The dollar slipped 0.42% to 99.70 against a basket of major rivals. The euro rose 0.49% against the dollar to $1.1547.

U.S. Treasury yields fell, with investors concerned about the labor market and uncertainty from the U.S. government shutdown.

Benchmark 10-year yields and two-year yields both dropped by about seven basis points to 4.089% and 3.562%, respectively.

Earlier, euro zone benchmark Bund yields dropped from their four-week high after the BoE decision. Germany's 10-year yields were down 2 basis points at 2.65% after hitting 2.676% early in the session, the highest level since October 10.

Oil prices declined as investors weighed a potential supply glut. U.S. crude eased 17 cents to settle at $59.43 a barrel and Brent fell 14 cents to settle at $63.38.

(Additional reporting by Marc Jones in London and Rae Wee in Singapore; Editing by Philippa Fletcher, Peter Graff, Richard Chang and Mark Porter)