Wall Street's Hottest Trades See Exodus

Original Article Title: "Wall Street's Hottest Trades, Full Retreat"

Original Article Author: He Hao, Wall Street News

From tech stocks to gold to cryptocurrency, Wall Street's hottest trades, which were previously chased by funds every day, have now all turned to a sudden retreat to safety.

This time there was no single triggering factor, unlike in April last year when the market plunged into panic selling due to U.S. President Trump launching a trade war. Instead, a series of slowly accumulating news continuously sounded the alarm, triggering market anxiety over asset valuations, with many already suspecting that these valuations had risen too high and eventually causing investors to almost simultaneously choose to retreat.

Thursday's market performance once again confirmed this point:

· The S&P 500 fell by 1.2%, closing lower for the third consecutive trading day; the Nasdaq 100 index extended its decline, marking the deepest pullback since last April.

· Software stocks continued to fall, with artificial intelligence company Anthropic launching a new model aimed at conducting financial research, highlighting the competitive threat posed by new technology.

· The silver price, which previously hit a historic high alongside gold, plummeted by 17%.

· Bitcoin's one-day plunge of 10% erased all its gains since Trump won the election 15 months ago, as investors began unwinding leveraged trades that were already in losses.

· U.S. Treasury bonds rebounded, once again playing their traditional role as the "ultimate safe haven."

· Alphabet, Google's parent company, saw its stock price come under pressure despite revenue exceeding expectations, following the announcement of an ambitious spending plan.

· After U.S. markets closed on Thursday, Amazon's stock price plummeted by 10% as the company announced plans to invest $200 billion this year, far exceeding analyst expectations, with these analysts increasingly concerned about tech companies' excessive spending on artificial intelligence.

The recent market trends stand in stark contrast to Wall Street's sentiment at the beginning of the year. Back then, strategists expected the U.S. stock market to enjoy the longest bull run in nearly twenty years. These predictions were based on several assumptions: the AI frenzy would continue, a resilient economy would continue to support corporate profits, and the Fed would cut interest rates.

This overall outlook largely remains in place, as seen in the robust financial reports released in recent weeks. However, at the same time, the market has 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 Fed chair, which direction will monetary policy take;

· And whether the valuation of assets such as gold, bitcoin, and even tech giants like Alphabet is already too high and unsustainable in the long term.

Momentum Stagnation Particularly Evident in Bitcoin:

For most of last year, the speculative frenzy sparked by Trump's election victory propelled cryptocurrency prices sharply higher, but this month, as investors withdrew en masse, this market experienced a collapse-like crash. On Thursday, as the trading day progressed, the sell-off of Bitcoin intensified, dragging down other cryptocurrencies, related ETFs, and "crypto treasury" companies holding large amounts of Bitcoin.

Later on Thursday afternoon New York time, Bitcoin plummeted 13% at one point, falling below $63,000, retracing almost half of its historic high set four months ago.

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

Regarding the above trends, industry insiders point out:

· People are clearly shifting to more defensive strategies. This is more like a shoot-first-ask-questions-later market environment. Fear and uncertainty are evident across the entire market.

· The recent pullback reflects market concerns: the hottest stocks and assets such as gold rose too quickly before and should have experienced a "settling." This is a reset. Momentum may have been excessively spent.

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