Stocks Sink Amid AI Wipeout, Dollar Shines Ahead of NFP

Equity markets declined on the day as investors sold technology and AI-linked names, while the US dollar strengthened ahead of the upcoming Non-Farm Payrolls report. The move appears driven by a risk-off rotation out of high-multiple growth stocks, with the dollar benefiting from safe-haven demand and expectations that a firm labor print could keep Federal Reserve rate cuts on a slower path. The rate differential channel is central here: stronger US yields tend to attract capital inflows, lifting the dollar against major peers and pressuring dollar-denominated risk assets. Technology and semiconductor equities are the most exposed given their sensitivity to both sentiment shocks and discount-rate repricing, while currency pairs such as EUR/USD and USD/JPY are likely to react most sharply to the payrolls data. The key catalyst is the NFP release, where traders will focus on headline job creation, average hourly earnings, and revisions to prior months as signals for inflation persistence and the Fed's policy trajectory.

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