What began as a banner day for stocks turned into a major rout, as investors signaled ongoing skepticism about the longevity of the artificial intelligence boom and trimmed hopes of support from the Federal Reserve.

The tech-heavy Nasdaq fell 2%, and the broad S&P 500 index dropped by more than 1.5%. The Dow Jones Industrial Average, which tracks 30 top-tier stocks, declined by nearly 390 points. It had been up 700 points earlier in the day. Cryptocurrencies also shed billions in value: Bitcoin had fallen below $87,000 as of late Thursday afternoon, weeks after having set highs above $120,000.

The stunning turnaround added further unease to an already shaky economy that has forced households to trim budgets amid stubborn inflation and signs of a wavering job market. With an ever-increasing part of the economy’s principal driver — consumer spending — now reliant on affluent households, an extended market pullback could inflict wider damage.

‘You don’t have to have the biggest bubble in history for an expensive stock market’ and end up seeing declines, said Matt Maley, chief market strategist at Miller Tabak asset management group.

Traders’ hopes were boosted early Thursday by a better-than-expected jobs report that appeared to show the economy remained resilient. Even before the day began, stocks looked poised to rise after Nvidia, the chipmaker at the heart of the AI boom, reported strong quarterly earnings and revenue.

Yet by midday, markets had turned red. The solid September jobs report diminished the odds that the Federal Reserve will cut interest rates next month to lower the cost of borrowing money to spur economic activity. When investors don’t have to pay as much in interest, they often put those savings into stocks.

“The broad rebound in payrolls suggests diminished risks of a higher unemployment rate,” analysts with Morgan Stanley said in a note published shortly before noon. “We no longer expect a Fed cut in December.”

Losses were further compounded by ongoing concerns about AI — specifically, how much more profitable the companies buying chips like Nvidia’s will be. The fears were articulated Wednesday evening on X by Michael Burry, made famous by the movie ‘The Big Short.’

‘Just because something is used does not mean it is profitable,’ he wrote.

Finally, the ongoing sell-off of bitcoin indicated to some traders that a key source of support for stocks — retail or day traders — were beginning to waver on their trademark ‘buy the dip’ mentality.

‘I wouldn’t say we’ve flipped from bull to bear,’ said Steve Sosnick, chief strategist at Interactive Brokers financial group. ‘I would say we’ve flipped from bull to balanced market in the short term. A lot depends on whether sentiment continues to weaken.’

Stocks had already been showing signs of flagging in recent weeks. With Thursday’s losses, the S&P 500 fell to its lowest point since September.

The long-delayed September jobs report, which showed that the United States added a sturdy 119,000 jobs, appeared to show some glimmers of hope for the economy.

Although the unemployment rate ticked up from 4.3% in August to 4.4%, about 450,000 workers entered the labor force. Economists view that as evidence that job opportunities are still plentiful, despite a wave of corporate layoffs.

Just before the Bureau of Labor Statistics released the jobs report, Verizon told employees it planned to lay off 13,000 employees, or about 13% of its workforce.

The company joined a suite of other blue-chip employers that say they plan to eliminate tens of thousands of jobs, including Amazon, General Motors, IBM, Microsoft, Paramount, Target and UPS.

The details of the jobs report, which captured conditions before the government shutdown, as well more recent jobs data, suggested a more mixed picture for the U.S. economy.

Manufacturing shed 6,000 jobs, continuing a trend in a sector the Trump administration has touted as a key target of its economic policies. Transportation and warehousing also lost 25,300 jobs. Wage growth slowed, and job totals for July and August were revised downward.

The employment gains in September were concentrated in the health care, hospitality and social assistance sectors.

Another snapshot of the economy came courtesy of Walmart, which on Thursday reported strong sales and raised its outlook for the year. That strength points to cracks in the economy, though. Executives said the chain is luring more high-income shoppers who are looking for bargains, and noted that lower-income families are feeling more pressure.

‘As pocketbooks have been stretched, you’re seeing more consumer dollars go to necessities versus discretionary items,’ Chief Financial Officer John David Rainey said on an earnings call Thursday morning.

Walmart’s stock closed 6.5% higher.

Bitcoin and ether slumped to multi-month lows on Friday, with cryptocurrencies swept up in a broader flight from riskier assets as investors worried about lofty tech valuations and bets on near-term U.S. interest rate cuts faded.

Bitcoin, the world’s largest cryptocurrency, fell 5.5% to a seven-month low of $81,668. Ether slid more than 6% to $2,661.37, its lowest in four months.

Both tokens are down roughly 12% so far this week.

Cryptocurrencies are often viewed as a barometer of risk appetite and their slide highlights how fragile the mood in markets has turned in recent days, with high-flying artificial intelligence stocks tumbling and volatility spiking VIX.

“If it’s telling a story about risk sentiment as a whole, then things could start to get really, really ugly, and that’s the concern now,” Tony Sycamore, a market analyst at IG, said of the fall in bitcoin.

About $1.2 trillion has been wiped off the market value of all cryptocurrencies in the past six weeks, according to market tracker CoinGecko.

Bitcoin’s slide follows a stellar run this year that propelled it to a record high above $120,000 in October, buoyed by favourable regulatory changes towards crypto assets globally.

But analysts say the market remains scarred by a record single-day slump last month that saw more than $19 billion of positions liquidated.

“The market feels a little bit dislocated, a bit fractured, a bit broken, really, since we had that selloff,” said Sycamore.

Bitcoin has since erased all its year-to-date gains and is now down 12% for the year, while ether has lost close to 19%.

Citi analyst Alex Saunders said $80,000 would be an important level as it is around the average level of bitcoin holdings in ETFs.

The selloff has also hurt share prices of crypto stockpilers, following a boom in public digital asset treasury companies this year as corporates took advantage of rising prices to buy and hold cryptocurrencies on their balance sheets.

Shares of Strategy, once the poster child for corporate bitcoin accumulation, have fallen 11% this week and were down nearly 4% in premarket trade, languishing at one-year lows.

JP Morgan said in a note this week that the company could be excluded from some MSCI equity indexes, which could spark forced selling by funds that track them.

Its Japanese peer Metaplanet has tumbled about 80% from a June peak.

Crypto exchange Coinbase was down 1.9% in premarket trade and is on course for its longest losing streak in more than a month.

Crypto miners MARA Holdings and CleanSpark were down 2.4% and 3.6%, respectively, while the Winklevoss twins’ newly-listed Gemini has plunged 62% from its listing price.

“Bitcoin market conditions are the most bearish they have been since the current bull cycle started in January 2023,” said digital asset research firm CryptoQuant in its weekly crypto report on Wednesday.

“We are highly likely to have seen most of this cycle’s demand wave pass.”