US market turmoil continued on Thursday as tech companies extended their tumble for a seventh straight session, with investors worried that fast-advancing artificial intelligence tools could upend the sector.
The S&P 500 software and services index dropped 4.6 per cent, having shed about $1 trillion in market value since January 28, in a sell-off called "software-mageddon". The Nasdaq 100 extended its deepest slide since April.
Some of the big tech names hurt most by the rout included ServiceNow, which fell 7.6 per cent, Salesforce, which slipped 4.7 per cent, and Microsoft, which dropped 5 per cent.
After the closing bell, Amazon slid more than 8 per cent, after saying said it plans to spend $200 billion this year on data centres, chips and other equipment, unnerving investors worried about whether its wager on AI will pay off. It comes after Amazon's billionaire owner Jeff Bezos announced 16,000 job cuts at his company, and at The Washington Post.
All across Wall Street, day by day, the headlong rush into the most popular trades, from tech stocks to gold to cryptocurrencies, has given way to a sudden retreat from risk.
There has been no single cause, like there was last April when US President Donald Trump’s trade war sent markets into a tailspin. Instead, it has been a slow drumbeat of news that is sowing anxiety about valuations that many suspected had already increased too far – and causing investors to pull back all at once.
Silver, which had tracked gold to record highs, lost 17 per cent. Bitcoin dropped 10 per cent, erasing all of the gains since Mr Trump’s election last year, as investors unwound money-losing trades financed with borrowed money. US Treasuries rallied, resuming their usual role as a haven of last resort.
The recent activity marks a strong shift from the mood on Wall Street heading into the year, when strategists were predicting that stocks were poised for the longest winning streak in nearly two decades.
The forecasts rested on expectations that the AI boom would continue, the surprisingly resilient economy would keep bolstering corporate profits and that the Federal Reserve would reduce interest rates.
That outlook remains largely in place, as shown by the solid earnings reports in recent weeks, but there’s also been a renewed focus on some of the mounting risks, such as the future of companies that will be displaced by the AI boom and questions about the direction of the Federal Reserve.
About $1 billion in Bitcoin positions has been liquidated in the past 24 hours, according to data from CoinGlass.
All told, the global crypto market has lost $2 trillion in value since hitting a peak of $4.379 trillion in early October, CoinGecko data showed, with about $800 billion wiped out in the past month.
