All across Wall Street, day by day, the headlong rush into the most popular trades, from tech stocks to gold to cryptocurrencies, has given way to a sudden retreat from risk.<\/p>\n
There\u2019s been no single cause, like there was last April when President Donald Trump\u2019s trade war sent markets into a fearful tailspin. Instead, it\u2019s been a slow drumbeat of news that is sowing anxiety about valuations that many suspected had already run up too far \u2014 and causing investors to pull back all at once.<\/p>\n
That was clear again on Thursday, when the S&P 500 slid 1.2%, its third straight daily decline, and the Nasdaq 100 extended its deepest slide since April. Software stocks extended their tumble after artificial-intelligence startup Anthropic rolled out a new model designed to conduct financial research, the second time this week the company has jolted markets, underscoring the competitive threat from the new technology.<\/p>\n
Silver \u2014 which had tracked gold to record highs \u2014 cratered 20%. Bitcoin dropped more than 13%, erasing all of the gains seen since Trump\u2019s election 15 months ago, as investors unwound money-losing trades financed with borrowed money. US Treasuries rallied, resuming their usual role as a haven of last resort. And after the closing bell, Amazon.com Inc. plunged more than 11% when it said it plans to invest $200 billion this year, far more than the amount forecast by analysts who\u2019ve grown increasingly concerned that tech companies are overspending on AI.<\/p>\n
Read: Silver plummets again as 17% slide overturns two-day recovery<\/p>\n
Those jitters spilt into Asian markets on Friday, with South Korean stocks sinking over 5% at one point and chipmakers Samsung Electronics Co and SK Hynix Inc among the biggest drags. European stocks slid and Nasdaq 100 Index futures fell 0.4%.<\/p>\n
\u201cPeople are definitely going more defensive,\u201d said Brian Frank, president and portfolio manager at Frank Funds. \u201cIt\u2019s more of like a shoot first and ask questions later type environment.<\/p>\n
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The recent activity marks a strong shift from the mood on Wall Street heading into the year, when strategists were predicting that stocks were poised for the longest winning streak in nearly two decades. The forecasts rested on expectations that the AI boom would continue, the surprisingly resilient economy would keep bolstering corporate profits and that the Federal Reserve would dial down interest rates.<\/p>\n
That outlook remains largely in place, as evidenced by the solid earnings reports rolling out in recent weeks. But there\u2019s also been a renewed focus on some of the mounting risks: The companies that will be displaced by the AI boom; questions about the direction of the Fed if Trump\u2019s pick, Kevin Warsh, is confirmed as Jerome Powell\u2019s replacement as chair; and stretched valuations \u2014 on assets like gold, Bitcoin, or even tech giants like Alphabet Inc. \u2014 that may not be sustainable in the long run.<\/p>\n
Fresh labour-market data also added to the pressure on markets Thursday. New figures from Challenger, Gray & Christmas showed companies announced the largest number of job cuts for any January since the depths of the Great Recession in 2009, adding to concerns that economic momentum may be starting to crack.<\/p>\n
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The reversal was most dramatic for Bitcoin. After a meteoric rise for much of last year as Trump\u2019s victory set off a speculative rush into cryptocurrencies, the market for such tokens has tumbled sharply this month as investors yanked out cash.<\/p>\n
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Read: Bitcoin bounces near $60 000 after 50% retreat from October peak<\/p>\n
On Thursday, the selloff in Bitcoin deepened as the trading day wore on, dragging down other tokens, exchange-traded funds and the treasury companies like Strategy that hold vast sums of coins. By late afternoon in New York, it had slumped 13% to just over $63,000, wiping out roughly half its value since it hit a record high four months ago.<\/p>\n
\u201cThe fear and uncertainty across the market is evident,\u201d said Chris Newhouse, head of business development at Ergonia.<\/p>\n
In the stock market, the drop was more subdued. Yet the pressure was broad-based, with nine of 11 major industry groups in the S&P 500 retreating. In addition to concerns about which companies will wind up on the losing end of AI technology, investors have been worried about whether the massive investments in the technology will pay off. That was evident in the drop by Google\u2019s parent, Alphabet, which slipped after outlining an ambitious spending plan even as revenue beat estimates.<\/p>\n
Kim Forrest, chief investment officer at Bokeh Capital Partners, said the recent retreat is a reflection of the worries that the hottest stocks and other assets, like gold, had simply run up too far and were due for a little reckoning.<\/p>\n
\u201cIt\u2019s a reset,\u201d she said. \u201cMomentum may have just strung itself out.\u201d<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
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