Call it some wind blowing away what could be an AI bubble, or the Fed engineering tight liquidity into a growing economic slowdown, or some combination of the two, but markets are pulling back on Thursday.
Before midday on the east coast, the Nasdaq was down 2% and the S&P 500 down 1.2%.
Crypto prices – in the unfortunate position of recent weeks of being uncorrelated with stocks when they rise every single day, but perfectly correlated when stocks sell off – are taking it down again. Bitcoin is down 3% in the past 24 hours and threatens to fall back below $100,000. Ether , Solana and Doge (Doge) is less than 2%-6%.
Crypto-related stocks are having a tougher time of it. Robinhood (Hood) fell 8.5% a day after reporting a massive earnings beat, in part due to surging crypto trading. Among other exchanges, Coinbase (coin) is lower by 5.6% and gemini (gemi) by 3%. Bullish (BLSH) fell 8% and Galaxy Digital (GLXY) 5.1%.
Capital continued to flee the Digital Asset Treasury sector, led by a 5.9% decline in the pioneer strategy (MSTR). At $238, MSTR is now down 6.8% year-over-year and down 56% since reaching $543 in the days following President Trump’s election victory.
Bitcoin mining stocks – many of which have surged this year thanks to a pivot to becoming AI infrastructure providers – have not been spared. Hut 8 (hut), Iren (Iren), and Cipher Mining (CIFR) were among those down more than 8%.
Getting hawkish at the wrong time?
Markets continue to reel from the Fed’s surprise hawkish pivot last week in which Chairman Jerome Powell threw a big bucket of cold water on the settled idea that the central bank will cut rates at its December meeting.
Powell’s sentiment has since been echoed by many other Fed members. Concerned about flying blind while the government shutdown means no official economic statistics, the central bank either missed or chose to ignore what has been a string of other data pointing to underlying weakness.
The latest came Thursday along One of the worst Challenging job layoffs at work for more than two decades, including A disturbing sight from car sales bellwether carmax (kmx). The CEO of that company did not expect to drop – the shares are less than 20%. A day ago, McDonald’s warned of the economic pressure felt by its customers, sentiments previously echoed by chains like Chipotle and Cava.
The ongoing shutdown of the federal government appears to be further along than previously expected, according to the The latest polymarket odds. People can carp about deficits and whine about the government all they want, but a shutdown means billions of dollars that would otherwise flow into the economy (and markets) would not do so.
