It’s getting uglier by the moment in US stock markets.
The S&P 500 is down 1.4% and the Nasdaq Composite is down 2.2%. The big drags are software stocks and
Some notable declines:
- Paypal -20%
- Shopify -11%
- Accenture -10%
- Qualcomm -5%
- Oracle -4.6%
- Nvidia -3.6%
- Microsoft -3%
- Amazon -3%
- Meta -2.6%
- Google -1.5%
- Tesla -1.2%
What’s odd about this move is that more than half of the stocks in the S&P 500 are higher. That’s being led by energy, consumer non-cyclicals, basic materials and utilities. In short, it’s the ‘old economy’ stocks I wrote about earlier.
Even worse than stocks are crypto. Her’s a look at the wreckage:
- BTC -6.8% to $73,055
- ETH -9.5%
- XRP -6.8%
These declines leave bitcoin down 17% over the past week and Ethereum down 29%. The latter has just taken out the May 2025 low.
Meanwhile bitcoin has given up all its gains since Trump’s re-election.
It’s certainly a selective selloff with gold up 4.7% in its biggest one-day gain ever in nominal terms. Silver is also up 5% but has backed off after a more than 10% gain earlier. Oil is up more than $1 on Iran-US war worries.
Once again, the US dollar is disconnected from the risk trade as it’s broadly (though modestly) lower today.
I think a few things are behind the selloff:
- The worries about an AI selloff or shakeout due to high valuations and massive capex
- OpenAI and Nvidia in some kind of war of words about investment and chip performance
- Software getting slaughtered as AI kills the moat
- Worries about all the private equity money in software, perhaps spilling over to banks
It’s not a pretty picture and I tend to think that OpenAI fight is the biggest part of it. The money is no longer flowing into anything tagged ‘AI’ as the valuations got insane. Elon Musk seems to have dumped xAI into SpaceX at an opportune time, allowing his investors to unload into a space company that’s likely unique enough to hold it’s premium valuation.
This article was written by Adam Button at investinglive.com.