US stocks drop as softening labor data weigh on sentiment

U.S. stocks finished lower on Thursday, as investors were digesting earnings from technology giants and a series of reports pointing to a cooling labor market.

The Dow Jones Industrial Average fell by 1.2 percent to 48,908.72. The S&P 500 sank 1.23 percent to 6,798.4. The Nasdaq Composite Index shed 1.59 percent to 22,540.59.

Nine of the 11 primary S&P 500 sectors ended lower, with materials and consumer discretionary leading the laggards by dropping 2.75 percent and 2.59 percent, respectively. Meanwhile, consumer staples and utilities led the gainers by adding 0.25 percent and 0.11 percent, respectively.

The tech sector remained the primary focus of market volatility after Google parent company Alphabet reported quarterly results late Wednesday that beat revenue expectations.

Investor attention has now shifted to Amazon, which is scheduled to release its fourth-quarter results after the closing bell on Thursday.

However, the broader market remains cautious as peers in the "Magnificent Seven" continue to reveal significant costs associated with the ongoing artificial intelligence arms race.

Economic data released Thursday further dampened market sentiment by providing fresh evidence of a softening labor market.

The U.S. Department of Labor reported that weekly initial jobless claims in the United States rose to 231,000, exceeding economists' forecasts. Simultaneously, the Job Openings and Labor Turnover Survey revealed that unfilled positions dropped to 6.5 million in December, the lowest level recorded since September 2020.