MSCI’s gauge of stocks across the globe dropped 5.89 points, or 0.59%, to 992.00

Stock indexes dropped sharply on Thursday, while the British pound firmed after the Bank of England opted against an interest rate cut.

MSCI’s gauge of stocks across the globe dropped 5.89 points, or 0.59%, to 992.00.

Sterling firmed 0.64% to $1.3132. Ahead of likely tax hikes in UK Chancellor Rachel Reeves’ budget later this month, the BoE Monetary Policy Committee voted 5-4 to keep the central bank’s benchmark bank rate at 4.0%. The close vote kept expectations of a cut before year-end intact.

The pan-European STOXX 600 index declined 0.7%.

In the U.S., the S&P 500 and Nasdaq each dropped more than 1%.

Investors remain focused on stretched valuations, government shutdown, trade tariff legal rulings and the ongoing slew of corporate earnings.

The S&P 500 technology index ended down 2%, while consumer discretionary shed 2.5%. The Philadelphia SE Semiconductor index slipped 2.4%.

Shares of U.S. chipmaker Qualcomm dropped 3.6% after warning that its chips might not be as dominant as before in future Samsung gadgets.

This earnings season is not defined in the rearview mirror. The market wants guidance and right now, with tariffs, the shutdown and possibly peak AI, the future could be bleak, said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

Investors are concerned about inflated stock prices, particularly from artificial intelligence-related momentum shares. Earlier this week, some U.S. bank chief executives warned about a likely market pullback.

The Dow Jones Industrial Average dropped 398.70 points, or 0.84%, to 46,912.30, the S&P 500 shed 75.97 points, or 1.12%, to 6,720.32 and the Nasdaq Composite slipped 445.80 points, or 1.90%, to 23,053.99.