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

Written by: He Hao

Source: Wall Street Insights

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

This time, there is no single trigger factor, unlike last April when the market plunged into panic due to President Trump’s trade war actions. Instead, a series of slowly accumulating news has been ringing alarm bells, sparking market anxiety over asset valuations. Many have long suspected these valuations were overly inflated, ultimately leading investors to withdraw almost simultaneously.

The market movements on Thursday once again confirm this:

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

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

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

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

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

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

After Thursday’s 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-related spending by tech firms.

Recent market trends stand in stark contrast to the sentiment at the start of the year. Back then, strategists predicted the U.S. stock market might enjoy its longest winning streak 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 might be eliminated in the AI wave;
• If Kevin Warsh, nominated by Trump, is confirmed as Fed Chair to succeed Powell, what direction will monetary policy take;
• 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 election drove cryptocurrency prices sharply higher. But since this month, with massive investor withdrawals, the market has experienced a collapse-like plunge.

On Thursday, as trading progressed, Bitcoin’s sell-off intensified, 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 its all-time high set four months ago.

In the stock market, declines were relatively moderate but widespread, with 9 out of 11 major sectors of the S&P 500 falling. Besides concerns over which companies will be the losers 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 reflects this sentiment.

Industry experts 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 concerns that the most popular stocks and assets like gold have risen too quickly and should undergo a “clearing” process. This is a reset. Momentum may have been overextended.