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US STOCKS TUMBLE AS AI CONCERNS REEMERGE

Renewed concerns about the impact of AI on software companies helped to send stocks lower on Thursday, while traders also evaluated how many times the Federal Reserve is likely to cut rates this year.

Cisco Systems CSCO.O reported weaker-than-expected quarterly adjusted gross margin late on Wednesday, adding to concerns about the impact of quickly developing artificial intelligence models. Cisco’s stock ended down 12% on Thursday.

Meanwhile, stronger jobs growth and an unexpected drop in the unemployment rate in January led traders to briefly pare bets on how many times the Fed will cut rates this year.

Data on Thursday showed that the number of Americans filing new applications for unemployment benefits decreased less than expected last week.

Fed funds futures traders are now pricing in 59 basis points of cuts by December, up from 54 basis points earlier on Thursday.

Friday’s consumer price inflation report for January is the next major economic focus for clues about likely U.S. central bank policy. It is expected to show that both headline and core inflation rose by 0.3% during the month, according to the median estimate of economists polled by Reuters.

Some analysts, however, have pointed out that the CPI fixing and alternative measures such as the Truflation Index suggest that price pressures may be lower than expected.

The three main stock indexes ended down on Thursday, led by a 2% drop in the Nasdaq Composite .IXIC.

Tech .SPLRCT was the weakest S&P 500 .SPX sector, with only Utilities .SPLRCU, Consumer Staples .SPLRCS and Real Estate .SPLRCR ending up on the day.

Additionally, Staples scored a record close.

Here is Thursday's closing market snapshot:

(Karen Brettell)

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