All the hottest trades on Wall Street are pulling back across the board

This time, there is no single trigger factor.

Written by: He Hao

Source: Wall Street Insights

From tech stocks to gold and then to cryptocurrencies, the hottest trades on Wall Street that were previously flooded with capital are now experiencing a sudden retreat to safe havens.

This time, there is no single trigger factor, unlike April last year, when the market plunged into panic due to President Trump’s trade war. Instead, a series of slowly accumulating news continuously sounded alarms, triggering market anxiety over asset valuations, and many people had already suspected that these valuations had become too high, ultimately leading investors to withdraw almost simultaneously.

Thursday’s market movements once again confirm this:

The S&P 500 fell 1.2%, marking its third consecutive day of decline; the Nasdaq 100 index extended its losses, hitting its deepest correction since April last year.

Software stocks continued their decline, while AI company Anthropic launched a new model aimed at conducting financial research, highlighting the competitive threat brought by new technologies.

Silver prices, which had previously hit a historic high along with gold, plummeted 17%.

Bitcoin dropped 10% in a single day, erasing all gains since Trump’s election 15 months ago, as investors began to close out leveraged, loss-making trades.

U.S. Treasuries rebounded, once again playing the traditional role of the “safe haven.”

Despite exceeding expectations with its revenue, Google’s parent company Alphabet’s stock still came under pressure after announcing an ambitious spending plan.

After Thursday’s US stock market close, Amazon’s stock plunged 10%, as the company announced plans to invest $200 billion this year—far above analyst expectations, who are increasingly worried about excessive AI spending by tech companies.

Recent market trends stand in stark contrast to the sentiment at the beginning of the year. At that time, strategists predicted that the U.S. stock market could see its longest consecutive rally in nearly two decades. These forecasts were based on several assumptions: that the AI boom would continue, that a resilient economy would keep supporting corporate profits, and that the Federal Reserve would cut interest rates.

This overall outlook largely remains intact, as evidenced by the solid earnings reports released over the past few weeks. However, the market is also refocusing on some accumulating risks:

• Which companies will be eliminated in the AI wave;
• What will happen to monetary policy if Kevin Warsh, nominated by Trump, is confirmed to succeed Powell as Fed Chair;
• And whether assets like gold, Bitcoin, and even tech giants like Alphabet are already overvalued and unsustainable in the long term.

The momentum is particularly evident in Bitcoin:

Most of last year, the speculative frenzy triggered by Trump’s victory drove cryptocurrency prices sharply higher, but since this month, with massive investor withdrawals, the market has experienced a collapse.

On Thursday, as trading progressed, Bitcoin’s sell-off intensified further, dragging down other cryptocurrencies, related ETFs, and “crypto vault” companies like Strategy that hold large amounts of Bitcoin.

Later Thursday afternoon, New York time, Bitcoin briefly plunged 13%, falling below $63,000, nearly halving from its all-time high set four months ago.

In the stock market, declines were relatively moderate, but selling pressure was widespread, with 9 out of 11 major sectors in the S&P 500 declining. Besides concerns over which companies will lose out in the AI wave, investors are also questioning whether the huge investments in this technology will ultimately pay off. The decline in Alphabet’s stock price reflects this sentiment.

Industry insiders point out:

People are clearly shifting toward more defensive strategies. This feels more like a market environment where you shoot first and ask questions later. The fear and uncertainty across the entire market are evident.

The recent pullback reflects market concerns: the most popular stocks and assets like gold had previously risen too quickly and are due for a “reset.” This is a reset. Momentum may have been overextended.