All the hottest trades on Wall Street are retreating across the board.
From tech stocks to gold and even cryptocurrency, the previously most popular trades on Wall Street that were chased by capital every day have now fully shifted to a sudden retreat from risk.
This time, there is no single triggering factor, unlike last April when the market was plunged into panic-driven sell-offs due to President Trump's initiation of a trade war. Instead, a series of slowly accumulating news events have continuously sounded alarms, sparking market anxiety over asset valuations. Many had long suspected that these valuations had risen too high, and ultimately, investors almost simultaneously chose to withdraw.
Thursday's market performance once again confirmed this:
The S&P 500 fell 1.2%, closing lower for the third consecutive trading day; the Nasdaq 100 saw its decline widen, marking its deepest pullback since last April.
Software stocks continued their downward trend, while AI company Anthropic launched a new model aimed at financial research, highlighting competitive threats brought by new technology.
Silver, which had previously hit record highs alongside gold, plummeted 17%.
Bitcoin crashed 10% in one day, erasing all gains made since Trump’s victory 15 months ago, as investors began unwinding leveraged trades that had fallen into losses.
U.S. Treasuries rebounded, once again playing their traditional role as the ultimate safe haven.
Despite Alphabet, Google’s parent company, posting revenue above expectations, its share price was pressured due to the announcement of an ambitious spending plan.
After Thursday’s U.S. market close, Amazon’s shares plunged 10%. The company revealed plans to invest $200 billion this year, far exceeding analyst expectations, who have grown increasingly concerned about excessive spending on AI by tech companies.
Recent market movements stand in stark contrast to Wall Street’s sentiment at the start of the year, when strategists anticipated the longest bull run in nearly two decades for U.S. stocks. These predictions were rooted in several assumptions: the AI boom would continue, a resilient economy would keep supporting corporate profits, and the Fed would lower interest rates.
This overall outlook remains largely intact, as evidenced by the solid earnings reports released in recent weeks. However, the market has also refocused on several risks that have steadily accumulated:
- Which companies might be eliminated by the AI wave;
- What direction monetary policy will take if Kevin Warsh, nominated by Trump, is confirmed to succeed Powell as Fed chair;
- And whether valuations for assets including gold, Bitcoin, and even tech giants like Alphabet have become too high to sustain in the long term.
Momentum stagnation is particularly apparent in Bitcoin:
For most of last year, speculation fueled by Trump’s election win drove cryptocurrency prices sharply higher, but starting this month, a mass withdrawal by investors has led to a collapse in the market.
On Thursday, as trading progressed, selling in Bitcoin intensified, dragging down other cryptocurrencies, related ETFs, and "crypto vault-type" companies such as Strategy that hold large amounts of Bitcoin.
Late Thursday afternoon New York time, Bitcoin at one point plummeted 13%, falling below $63,000, nearly halving from the historical high set just four months ago.
In the stock market, declines were relatively moderate, but selling pressure was widespread, with nine out of the S&P 500’s 11 major sectors posting losses. Beyond concerns about which companies will be losers in the AI tech wave, investors are questioning whether massive investments in this technology will ultimately pay off. The drop in Alphabet’s share price clearly reflects this sentiment.
Regarding these movements, industry insiders point out:
People are clearly turning to more defensive strategies. It’s more like "shoot first, ask questions later" in this market. The fear and uncertainty across the whole market are obvious.
The recent pullback reflects market worries: 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 exhausted.
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