A broad shift toward risk aversion is underway across Wall Street's most popular trades, from technology stocks to gold and cryptocurrencies, reversing the daily influx of capital that had previously chased these assets.

Unlike the panic-driven plunge in April of last year, triggered by former President Trump's trade war, this downturn lacks a single catalyst. Instead, a series of gradually accumulating warnings has heightened market anxiety over asset valuations, which many had already suspected were stretched too high, ultimately prompting a near-simultaneous investor retreat. Thursday's market activity further confirmed this trend:

The S&P 500 fell 1.2%, marking its third consecutive day of declines, while the Nasdaq 100 index extended its losses, entering its deepest pullback since last April. Software stocks continued their decline, with the announcement of a new financial research model from AI firm Anthropic highlighting the competitive threats posed by emerging technologies. Silver prices, which had recently hit record highs alongside gold, plummeted by 17%. Bitcoin experienced a 10% single-day drop, erasing all gains made since Trump's election victory 15 months ago, as investors began unwinding leveraged, loss-making positions. U.S. Treasuries rallied, reaffirming their traditional role as a final safe haven. Despite reporting revenue that exceeded expectations, Alphabet, the parent company of Google, saw its stock pressured by the announcement of an ambitious spending plan. After the U.S. market close on Thursday, Amazon's shares plunged 10% after the company revealed plans to invest $200 billion this year, far surpassing analyst expectations. Analysts are growing increasingly concerned about excessive spending on artificial intelligence by tech companies.

Recent market movements stand in stark contrast to the sentiment on Wall Street at the start of the year, when strategists predicted the U.S. stock market was poised for its longest winning streak in nearly two decades. These forecasts were based on several assumptions: the artificial intelligence boom would persist, a resilient economy would continue to support corporate profits, and the Federal Reserve would cut interest rates. This overall outlook remains largely intact, as evidenced by the steady stream of robust earnings reports in recent weeks. However, the market has simultaneously refocused on a number of accumulating risks:

Which companies will be left behind in the AI wave; The potential direction of monetary policy if a Trump-appointee, such as Kevin Warsh, were confirmed to replace Jerome Powell as Fed Chair; And whether valuations for assets ranging from gold and Bitcoin to tech giants like Alphabet have become unsustainably high.

The momentum stall is particularly evident in Bitcoin:

For much of last year, speculative fervor following Trump's election victory drove a rapid ascent in cryptocurrency prices. This month, however, the market has collapsed as investors withdrew funds en masse. On Thursday, selling pressure intensified as the trading day progressed, dragging down other cryptocurrencies, related ETFs, and so-called "crypto vault" companies like Strategy that hold significant Bitcoin. In late afternoon trading in New York, Bitcoin tumbled as much as 13%, falling below $63,000 and giving back nearly half its value from the record high set four months prior.

In the stock market, declines were more moderate but selling pressure was widespread, with nine of the S&P 500's 11 major sectors finishing lower. Beyond concerns about which companies will be losers in the AI technology wave, investors are questioning whether massive investments in the technology will ultimately yield returns. The drop in Alphabet's stock exemplifies this sentiment. Industry insiders commented on these developments:

It's clear that people are moving towards more defensive strategies. This is more of a 'shoot first, ask questions later' market environment. The fear and uncertainty across the market are palpable. The recent pullback reflects market concerns that the hottest stocks and assets like gold had risen too rapidly and were due for a reckoning. This is a reset. Momentum may have been overextended.