Wall Street Slide Deepens as AI, Software and Crypto Unwind Gains

Wall Street’s selloff deepened as pressure on technology, AI-linked software, and crypto accelerated, with weak US labor data adding to concerns about stretched valuations and economic momentum. Major equity benchmarks extended their slide from near-record highs, while Bitcoin suffered one of its sharpest drops of this cycle. Investors rotated aggressively toward safety, lifting Treasuries and the dollar, as confidence in “crowded” growth trades continued to unwind.

Key Headlines & Market Movers:

• AI & Software Valuation Reset: Selling pressure intensified across software and AI-related names as investors questioned whether massive capital spending will translate into durable earnings. Results from Alphabet crystallized these fears: revenue beat expectations, but a sharply higher long-term capex outlook reinforced concerns that AI investment returns may be slower and less predictable. The narrative has flipped from software as an AI beneficiary to software as an AI disrupt-ee.

Labor Market Cracks Emerge: Downbeat jobs data rattled confidence in the “economic resilience” trade. Job openings fell to the lowest level since 2020, layoffs rose, and jobless claims exceeded expectations. The data underscored that the labor market is cooling more meaningfully than investors had assumed, raising the risk that growth slows faster than earnings expectations adjust.

• Broad-Based Equity Selling: What began as a growth-led pullback broadened into a market-wide decline, with most S&P 500 sectors lower and the equal-weighted index retreating from record highs. The S&P 500 briefly tested key technical support near its 100-day moving average, a level closely watched by market technicians for signs of deeper downside.

Crypto Rout & Deleveraging: Bitcoin slid sharply as leveraged positions were unwound amid broader risk aversion, erasing gains built up since late last year. The drop reinforced concerns that speculative assets remain vulnerable in periods of tightening financial conditions and rising volatility. As one of the most crowded trades, crypto has proven particularly sensitive to shifts in sentiment.

S&P 500 Sector Performance

Looking Ahead

Markets appear to be entering a valuation and expectation reset phase, particularly across growth and AI-exposed sectors. Near-term volatility is likely to persist as investors look for confirmation that earnings can stabilize even as labor data softens and central banks remain cautious. For now, the focus shifts to upcoming earnings and macro releases for signals on whether this move becomes a deeper correction, or a painful but necessary clearing of excess optimism.

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