Global markets are facing a period of increased volatility as investors reassess risk amid a confluence of concerns. A sell-off in U.S. equities extended into Asian trading Friday, spurred by declines in tech stocks and a dramatic drop in silver prices, signaling a broader shift away from recent market favorites. The downturn arrives as economic indicators paint a complex picture, wiht January seeing the highest number of job cuts since 2009 according to new data, adding to existing anxieties about the trajectory of monetary policy and the impact of rapid advancements in artificial intelligence.
Wall Street experienced a sharp shift in sentiment Thursday, with a move away from popular investments like technology stocks and gold giving way to a sudden bout of risk aversion. The S&P 500 fell 1.2%, marking its third consecutive day of declines, while the Nasdaq 100 registered its steepest drop since April. Nine of the 11 sectors within the S&P 500 closed the day in negative territory.
Software stocks, which had been under pressure in recent days following the unveiling of a new model by artificial intelligence firm Anthropic designed for financial research, continued their downward trend. The model’s release sparked concerns about the potential impact of AI on the broader tech landscape.
Silver, which had recently reached record highs alongside gold, plummeted 20% on Thursday. The precious metal experienced significant volatility during Friday’s session, initially falling as much as 9.6% before staging a partial recovery to close up 2.5%. Gold, meanwhile, gained 0.93% to trade at $4,822 per ounce.
Concerns in U.S. equity markets spread to Asia. South Korean stocks fell by over 5% at one point, led by declines in chipmakers Samsung Electronics Co. and SK Hynix Inc. The MSCI Asia Pacific Index briefly dipped as much as 2% Friday before paring losses to end the day up 0.2%.
U.S. futures signaled further declines, with Nasdaq-linked futures down nearly 1%. U.S. Treasury yields rose as investors sought the safety of government bonds. The yield on the 10-year U.S. Treasury note fell nine basis points to 4.18% on Thursday and held steady at that level in Asian trading Friday.
The Bloomberg Dollar Index was flat at 1,194 points Friday morning, following a 0.3% increase on Thursday. The dollar traded at 43.6150 against the Turkish lira early Friday. “Investors are definitely taking a more defensive posture,” said Brian Frank, president and portfolio manager at Frank Funds. “It feels like a ‘shoot first, ask questions later’ environment.”
The recent sell-off echoes a similar downturn in April, which was triggered by tariffs announced by former U.S. President Donald Trump. However, this time, there isn’t a single clear catalyst for the broad-based decline across asset classes.
Instead, a series of developments have contributed to the investor pullback. Concerns are mounting that the AI boom may negatively impact many companies, uncertainty surrounds the potential direction of monetary policy under a prospective Jerome Powell successor – with Kevin Warsh frequently mentioned as a candidate – and valuations remain a concern despite a relatively positive earnings season. Adding to the negative sentiment, data released Thursday by Challenger, Gray & Christmas showed the highest number of January job cuts since 2009.
