A broad sell-off hit Wall Street as investors grew increasingly concerned about how the rapid artificial intelligence build out might pressure revenues and profit margins across sectors beyond technology including financial services, transportation, logistics, and commercial real estate. Renewed weakness in tech shares also weighed on sentiment, led by a sharp 12.3% plunge in Cisco Systems (CSCO) after the company issued disappointing guidance despite reporting better-than-expected fiscal second-quarter results, dragging the NYSE Arca Networking Index down 3%.

Gold producers suffered steep losses as a sharp decline in gold prices pulled the NYSE Arca Gold Bugs Index down 6.9%, while the Dow Jones Transportation Index tumbled 4% amid AI-related concerns. Financial, steel, and energy stocks also saw heavy declines, though telecom and utilities shares managed to edge higher, supported by falling Treasury yields. Meanwhile, the Labor Department reported that initial U.S. jobless claims fell slightly to 227,000, down by 5,000 from the prior week’s revised 232,000.

The National Association of Realtors also released a report showing existing home sales pulled back by much more than expected in the month of January and the focus now shifts to the Labor Department's report on consumer price inflation that is due to be released before the start of trading on Friday.

Asia-Pacific stocks region turned in a mixed performance. South Korea's Kospi spiked by 3.1%, while Hong Kong's Hang Seng Index slid by 0.9% and Japan's Nikkei 225 Index closed marginally lower. The major European markets also ended the day mixed while the French CAC 40 Index rose by 0.3%, the German DAX Index closed just below the unchanged line and the U.K.'s FTSE 100 Index fell by 0.7%.

In the bond market, treasuries moved sharply higher, more offsetting the pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slumped 6.8 bps to a two-month closing low of 4.10%.