In a visibly unsettled trading session on Tuesday, stock markets faltered as investors digested a confluence of factors weighing on sentiment. The Dow Jones Industrial Average slipped 360 points, equating to a 0.73% decline, while the broader S&P 500 index retreated by 1.25%, pulling back after a brief approach toward a record peak. The technology-focused Nasdaq index suffered a steep 2% drop, reflecting heightened risk aversion in the sector.
Underlying these equity market pressures, bitcoin—the world’s largest cryptocurrency by market capitalization—plummeted nearly 7% over the past 24 hours, settling just below the $73,000 mark. This level corresponds to bitcoin’s lowest valuation since November 2024, a period coinciding with the election victory of President Donald Trump. Following its drop, bitcoin experienced a slight rebound, trading near $75,000, yet remains down approximately 41% from its all-time high surpassing $126,000 recorded last October.
It is notable that the Trump administration had advocated for crypto-friendly policies, including ambitions to position the United States as a global hub for cryptocurrency innovation. Even so, bitcoin’s price trajectory in recent months has exhibited significant volatility, characterized by multiple sell-offs and difficulty regaining lost ground.
Amid this backdrop of instability in digital assets and equity markets, traditional precious metals emerged as beneficiaries. Gold futures surged 6.8%, touching $4,967 per troy ounce, while silver futures jumped 10%, reaching approximately $84.78 per troy ounce. The consistent run-up in gold prices has resulted in the metal outperforming bitcoin when measured over the last five years, according to data from FactSet.
Investors’ increasing preference for gold underscores its standing as a preferred store-of-value during periods marked by currency depreciation, geopolitical uncertainty, and unsettled macroeconomic conditions. Gerry O’Shea, head of global market insights at Hashdex, highlighted via email that this divergence in asset performance signals investor inclination toward gold amid current challenges. He also anticipates ongoing short-term volatility for bitcoin as the cryptocurrency industry grapples with enhanced regulatory scrutiny and the gradual integration of digital assets into mainstream financial infrastructures, while foreseeing a potential growth in bitcoin’s appeal over time.
The declines in stock markets were largely led by shares of technology and artificial intelligence firms. Key players such as Microsoft and Amazon saw their shares fall by 3.2% and 2.4%, respectively. Nvidia, often viewed as a cornerstone of AI technology investments, faced a 4.1% drop, exacerbating broader market losses.
Wall Street’s skepticism about the profitability of the artificial intelligence surge remains a concern, with investors questioning whether the substantial expenditures associated with AI development will ultimately be profitable. A recent stark example includes Microsoft’s sharp 10% share decline on Thursday last week, which erased nearly $360 billion in market capitalization. This drop followed quarterly earnings reports revealing cloud sales growth lagging forecasts combined with increased AI spending.
Currently entrenched in corporate earnings season, traders are meticulously evaluating recent financial results. There is an intensifying focus on companies’ projections for spending and their strategies to translate such investments into sustainable profits. This scrutiny extends into the software sector, where shares have noticeably pulled back amid apprehension that AI advancements could disrupt established business models. Salesforce, a prominent software company, saw its shares fall by 8% during this session.
Contrary to the predominantly negative market movements, Walmart’s shares increased by 2.1%, propelling the company’s market valuation beyond the $1 trillion threshold for the first time. This gain stands out as a positive note amid otherwise fragile equity sentiment.
Adding fuel to market volatility, geopolitical tensions intensified following reports that the United States military engaged and destroyed an Iranian unmanned aerial vehicle (UAV) nearing a US aircraft carrier. This development amplified concerns about potential conflict escalation in the region.
Reflecting the surge in investor anxiety, the CBOE Volatility Index (VIX), often referred to as Wall Street’s fear gauge, escalated by 19%. The index briefly surpassed the 20-point level, a benchmark indicative of elevated market uncertainty. This volatility permeated commodity markets as well, with oil futures rising amid the geopolitical unrest. Brent crude, the global benchmark, gained 1.9% to reach $67.56 per barrel, while West Texas Intermediate, the US benchmark, advanced 2.17% to $63.48 per barrel.
The US dollar index moderated slightly, declining 0.23%, pausing after a strong rally over the previous two days.