AI Valuations Trigger Market Pullback 07/11/2025

HOT stories for today

Market wrap:

• U.S. equities are on track for a losing week as weakness in prominent AI names continues to drag broader indexes lower. The S&P 500 is down about 1.8% week-to-date, while the Dow has slipped roughly 1.4% and the Nasdaq has fallen 2.8%, reflecting renewed pressure on highly valued tech leaders and the market’s increasingly narrow breadth. AI-linked heavyweights, including Nvidia, AMD, Tesla, and Microsoft, extended declines Thursday, erasing earlier momentum and weighing on sentiment.
• The selloff coincided with data showing October job cuts at their highest level in more than 20 years, underscoring 2025 as the worst layoff year since 2009. Overseas markets tracked Wall Street lower, with Asia-Pacific equities broadly weaker amid a resumption of the AI pullback. Meanwhile, China’s latest trade data showed an unexpected contraction in exports, including a 25% drop in shipments to the U.S. The Labor Department was due to release the monthly nonfarm payrolls report on Friday, but, for a second straight month, the release has been delayed by the ongoing government shutdown.

U.S. Layoffs Surge to Highest October Level Since 2003

• U.S. employers announced 153,074 job cuts in October, the highest for the month since 2003, according to Challenger, Gray & Christmas. The total marks the second-largest monthly layoff figure this year and contrasts with the ADP report earlier this week that suggested solid private hiring. Year to date, companies have announced more than 1.1 million layoffs, 44% increase from the same period in 2024, with two months remaining. A sizable portion of the earlier reductions stemmed from government restructuring efforts in March.
• “This is the weakest start to a fourth quarter for the labor market since the financial crisis,” said Andy Challenger, the firm’s senior vice president. He noted that companies typically avoid layoffs late in the year, making the October increase all the more notable. The data complicates the Federal Reserve outlook. Softer labor conditions could support the case for future rate cuts, but officials have emphasized caution. Chicago Fed President Austan Goolsbee said Thursday he wants more labor and inflation data before considering further easing.

Stocks on the move:

• Take-Two Interactive Software (TTWO): Shares fell about 7% after Rockstar Games delayed Grand Theft Auto VI to November 2026 from May, marking the second postponement.
• Airbnb (ABNB): Shares rose about 5% after reporting Q3 earnings and guidance ahead of expectations. Revenue came in at $4.1B; Q4 revenue forecast of $2.66–$2.72B topped the Street.
• Affirm (AFRM): Shares jumped more than 12% after beating on earnings and revenue, with quarterly gross merchandise volume also exceeding forecasts.
• DraftKings (DKNG): Shares slipped nearly 4% after Q3 results missed. The company posted a wider loss and revenue below expectations.
• Peloton (PTON): Shares gained around 10% after reporting a surprise profit in Q1, though paid subscriptions continued to decline.

Watchlist: TTWO, DKNG, AFRM, SOUN, ABNB, TTD, DBX, XYZ, EXPE

Key Economic Events Today:

EST time

10:00 am: USD Consumer Sentiment, Inflation Expectations
03:00 pm: USD FOMC Member Miran Speaks



Earnings

BMO (Before Market Open): Constellation Energy (CEG), Duke Energy (DUK), KKR and Co. Inc. (KKR), Enbridge Inc. (ENB)

The TEFS Analyst team wishes you a successful day!