The hottest trades on Wall Street are all retreating

From technology stocks to gold and then to cryptocurrencies, the various hottest trades on Wall Street that were previously being chased by funds every day have now completely shifted to a sudden retreat to safety.

This time, there is no single triggering factor, unlike last April when the market plunged into panic due to President Trump's trade war. Instead, a series of slowly accumulating news has continuously sounded alarm bells, triggering market anxiety over asset valuations, and many have long suspected that these valuations have risen too high, ultimately leading investors to almost simultaneously choose to retreat.

Thursday's market performance once again confirmed this:

The S&P 500 fell 1.2%, closing down for the third consecutive trading day; the NASDAQ 100 index widened its losses, marking the deepest correction since last April.

Software stocks continued their downward trend, with AI company Anthropic launching a new model aimed at executing financial research, highlighting the competitive threat posed by new technologies.

Silver prices, which previously reached historical highs alongside gold, plummeted by 17%.

Bitcoin fell 10% in a single day, erasing all gains since Trump won the election 15 months ago, as investors began to close out losing trades financed through borrowing.

U.S. Treasuries rebounded, once again playing the traditional role of a "last safe haven."

Despite its revenue exceeding expectations, Alphabet, Google's parent company, saw its stock price pressured downward after announcing ambitious spending plans.

After the market closed on Thursday, Amazon's stock price plummeted by 10%, as the company announced plans to invest $200 billion this year, far exceeding analysts' expectations, and these analysts have increasingly worried about excessive spending by tech companies on artificial intelligence.

Recent market movements stand in stark contrast to the sentiment on Wall Street at the beginning of the year. At that time, strategists expected the U.S. stock market to experience its longest consecutive rise 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 lower interest rates.

This overall outlook largely still exists, as evidenced by the robust earnings reports released in recent weeks. However, at the same time, the market has also refocused on some accumulating risks:

• Which companies will be eliminated in the AI wave;
• If Kevin Warsh, nominated by Trump, is confirmed to succeed Powell as Federal Reserve Chairman, what direction will monetary policy take;
• And whether the asset valuations of gold, Bitcoin, and even tech giants like Alphabet have become too high and are difficult to sustain in the long term.

The stagnation of momentum is particularly evident in Bitcoin:

For most of last year, the speculative frenzy triggered by Trump's victory drove cryptocurrency prices to soar, but since the beginning of this month, with a massive withdrawal of investments, this market has experienced a collapse.

On Thursday, as the trading day progressed, the sell-off of Bitcoin further 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 plummeted by 13%, falling below $63,000, nearly retreating half of the historical high set four months ago.

In the stock market, the declines were relatively mild, but the selling pressure was widespread, with 9 out of the 11 major sectors in the S&P 500 experiencing declines. In addition to concerns about which companies will be the losers in the AI technology wave, investors are also questioning whether the massive investments in this technology will ultimately yield returns. The drop in the stock price of Google's parent company Alphabet reflects this sentiment.

Regarding the above trends, industry insiders pointed out:

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

The recent pullback reflects market concerns: the hottest stocks and assets like gold had previously risen too quickly and were due for a "clearing." This is a reset. The momentum may have been overexhausted.

Risk Warning and Disclaimer

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