Written by: He Hao
Source: Wall Street News
From tech stocks to gold and cryptocurrencies, the hottest trades on Wall Street that were once swarmed by capital every day have now suddenly shifted to a full-scale risk-off retreat.
This time, there is no single trigger, unlike last April when the market plunged into a panic sell-off due to former U.S. President Donald Trump launching a trade war. Instead, a series of slowly accumulating messages have continuously sounded alarms, sparking anxiety about asset valuations that many had long suspected were overinflated, ultimately leading investors to retreat almost simultaneously.
Thursday's market movements once again:
The S&P 500 fell 1.2%, marking its third consecutive day of declines; the Nasdaq 100 index extended its losses, recording its deepest pullback since last April.
Software stocks continued their decline, as AI company Anthropic launched a new model designed for financial research, highlighting the competitive threat posed by new technologies.
Silver prices, which had previously hit record highs alongside gold, plummeted by 17%.
Bitcoin plunged 10% in a single day, erasing all gains made since Trump won the election 15 months ago, as investors began to unwind leveraged, loss-making trades.
U.S. Treasury bonds rebounded, once again playing their traditional role as the "ultimate safe haven."
Google parent Alphabet, despite reporting better-than-expected revenue, saw its stock price under pressure after announcing ambitious spending plans.
After the U.S. market closed on Thursday, Amazon's stock price plummeted by 10%. The company announced plans to invest $200 billion this year, far exceeding analyst expectations, with these analysts increasingly concerned about excessive spending by tech companies on artificial intelligence.
The recent market movements stand in stark contrast to Wall Street's sentiment at the beginning of the year. At that time, strategists expected the U.S. stock market to usher in its longest winning streak in nearly two decades. These predictions were based on several assumptions: the AI boom would continue, a resilient economy would continue to support corporate profits, and the Federal Reserve would cut interest rates.
This overall outlook largely remains, as evidenced by the steady stream of robust earnings reports in recent weeks. But at the same time, the market has refocused on a number of accumulating risks:
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Which companies will be eliminated in the AI wave;
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Where monetary policy is headed if Trump-nominated Kevin Warsh is confirmed to replace Powell as Fed Chair;
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And whether asset valuations—from gold and Bitcoin to tech giants like Alphabet—are already too high and unsustainable in the long run.
The stalling momentum is particularly evident in Bitcoin:
For most of last year, speculative fervor triggered by Trump election victory drove a rapid rise in cryptocurrency prices, but this month, as investors withdrew funds en masse, this market experienced a collapse-like crash.
On Thursday, as the trading day progressed, the sell-off in Bitcoin intensified, dragging down other cryptocurrencies, related ETFs, and "crypto vault" companies like Strategy that hold large amounts of Bitcoin.
Late Thursday afternoon New York time, Bitcoin plunged as much as 13%, falling below $63,000, nearly halving from the all-time high set four months ago.
In the stock market, the declines were relatively moderate but the selling pressure was broad, with 9 of the 11 main sectors of the S&P 500 index falling. Beyond concerns about which companies will be losers in the AI technology wave, investors are also questioning whether the massive investments in this technology will ultimately pay off. The stock price decline of Google parent Alphabet is a reflection of this sentiment.
Regarding the above movements, industry insiders pointed out:
People are clearly shifting to more defensive strategies. This is more like a 'shoot first, ask questions later' market environment. The fear and uncertainty across the market are obvious.
The recent pullback reflects market concerns that the hottest stocks and assets like gold had risen too fast and were due for a 'reckoning.' This is a reset. Momentum may have been overextended.
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