Closing Recap
U.S. stocks finished broadly lower on Thursday in one of the most volatile sessions in recent memory. A brutal sell-off in Microsoft, which lost a staggering $441 billion in market cap in its seventh-worst day ever, sent a shockwave through the technology sector and the broader market. The Nasdaq snapped its 6-day losing streak, but this masked deep underlying weakness. The day was marked by extreme cross-asset volatility, with precious metals experiencing a “flash crash” of biblical proportions. Gold plunged $500 in 30 minutes, and silver crashed 12% from a new all-time high, as leveraged retail traders were wiped out. In a dramatic turn, the U.S. Senate rejected a bill to keep the government open, making another shutdown just two days away a near certainty.
Key Takeaways
- Microsoft Plummets, Crushing Tech: Microsoft lost $441 billion in market cap, its second-largest drop ever, after disappointing guidance, dragging the entire software and AI sectors down with it.
- Gold and Silver Suffer “Flash Crash”: Precious metals experienced a violent reversal. Gold plunged $500 (10%) from a new record high in just 30 minutes, and silver crashed 12%, wiping out trillions in market cap as leveraged longs were liquidated.
- Government Shutdown All But Certain: The U.S. Senate failed to pass a funding bill, with a government shutdown now just two days away, adding another layer of political chaos to the market.
- Fed Chair Announcement Looms: President Trump is set to announce his pick for the next Fed Chair on Friday morning, with former Fed governor Kevin Warsh emerging as the frontrunner, a choice seen as hawkish by the market.
- Bitcoin Plunges Below $83,000, Erasing 2026 Gains: The cryptocurrency market has been crushed in the risk-off storm. Bitcoin has plunged over 7%, erasing all of its year-to-date gains as over $570 million in leveraged positions are liquidated.
- Oil Surges on Iran War Drums: Crude oil was a rare bright spot, with WTI jumping 3.5% as the U.S. sent an additional warship to the Middle East amid soaring tensions with Iran.
- Dollar Jumps on “Hawkish” Fed Chair Bets: The U.S. dollar rallied as the market began to price in the possibility of a more hawkish Fed under a potential Chair Warsh, sending EUR/USD lower.
- Yen Plummets as Intervention Hopes Fade: The Japanese Yen has been hammered, with USD/JPY surging, after U.S. Treasury Secretary Bessent explicitly ruled out FX intervention, giving a green light to yen sellers.
- Aussie and Kiwi Dollars Soar on Hawkish Central Bank Surprises: In a major divergence, the Australian and New Zealand dollars are soaring after a hot Australian inflation report cemented bets for an RBA rate hike, and the RBNZ signaled an end to its easing cycle.
- Copper Hits Record High: Amid the chaos, copper surged to a new all-time high, driven by strong industrial demand and supply concerns.
- Apple Earnings Provide Glimmer of Hope: In after-hours trading, Apple reported a strong beat on Q1 estimates, with a surprise jump in iPhone revenue and a rebound in China, providing a potential catalyst for a tech rebound.
- Plaza Accord 2.0? The U.S. trade deficit has widened by the most since 1992, a dynamic that historically led to the Plaza Accord and a coordinated dollar takedown, a major long-term risk for the greenback.
- Hedge Funds See Record Inflows: Investor confidence in hedge funds has returned in a big way, with the industry attracting a massive $115.8 billion in net inflows in 2025, the most since the 2007 pre-crisis era.
Market Overview: The “Biblical” Flash Crash
It was a day of historic and brutal volatility that will be remembered for a long time. A violent, multi-asset flash crash swept through global markets, triggered by a perfect storm of over-leverage, geopolitical anxieties, and a hawkish repricing of Fed expectations. The epicenter of the chaos was the precious metals market, where Gold collapsed 10% ($505) and Silver plunged 12% in just 30 minutes, a deleveraging event of “biblical proportions.” Thursday’s session was a brutal and historic day of cross-asset volatility, a “once-in-a-decade” event that will be remembered for a long time. The day began with a sense of optimism, but that was quickly shattered as a perfect storm of negative catalysts hit the market. A disastrous earnings report from Microsoft triggered a brutal sell-off in the technology sector, wiping out a staggering $441 billion in market cap and confirming investors’ worst fears about the sustainability of the AI boom. This micro-level panic was amplified by a series of macro shocks.
| Index | Up/Down | % | Last |
| DJ Industrials | (N/A) | – | 49071 |
| S&P 500 | -9.24 | -0.0013 | 6968 |
| Nasdaq | -172.33 | -0.0072 | 23685 |
| Russell 2000 | 1.23 | 0.0005 | 2654 |
The most dramatic was the “flash crash” in precious metals, where gold and silver plunged by 10-12% in just 30 minutes, a move of biblical proportions that liquidated a massive amount of retail leverage. Adding to the chaos, the U.S. Senate failed to pass a bill to avert a government shutdown, making another period of political paralysis all but certain. As if that weren’t enough, the market is now bracing for President Trump to announce a potentially hawkish new Fed Chair on Friday morning. This confluence of tech weakness, commodity market chaos, and political turmoil has created a deeply uncertain and fragile market environment.
Economic Calendar
Today is the final trading day of the week and month, and it is packed with high-impact events. Data Released Yesterday / Overnight:
- Apple Q1 Earnings: A strong beat, with iPhone revenue and China sales surprising to the upside.
- Japanese January Tokyo CPI: Cooled more than expected, with the core rate falling to 2.0%, easing pressure on the BoJ to hike rates.
Today’s Economic Calendar:
- European Session: A heavy slate of data including GDP for France, Spain, Germany, and the Eurozone, as well as German CPI.
- U.S. Session: The main highlights are the U.S. PPI report for December and President Trump’s Fed Chair announcement.
- 13:30 GMT – U.S. PPI (Dec).
- Canadian GDP is also due.
Asset Class Spotlight: FX, Commodities, Bonds & Crypto
The big story is the brutal flash crash in precious metals. After a day of historic volatility, precious metals are attempting to find a floor. Gold is trading around $5,350 an ounce, well off its record highs but still up significantly for the month. Silver has also stabilized after its brutal crash, but the market remains on edge. Crude oil is the standout performer, with WTI settling up 3.5% at $65.42 a barrel as the U.S. sent an additional warship to the Middle East, a clear sign of escalating tensions with Iran.
| Asset | Up/Down | Unit / % Change | Last |
| WTI Crude | 2.21 | 0.0349 | 65.42 |
| Gold | 14.6 | 0.0027 | 5354.8 |
| Silver | (Volatile) | -6.0%+ | 113.3 |
| EUR/USD | 0.0006 | 0.0005 | 1.1958 |
| USD/JPY | -0.52 | -0.0033 | 152.88 |
| 10-Year Note Yield | -0.012 | -0.0028 | 0.04239 |
The currency market has been completely reshaped by the hawkish Fed Chair speculation and the unwinding of the “Sell America” trade. The U.S. dollar is on the front foot as the market braces for a potentially hawkish Fed Chair announcement, while the yen is under pressure from soft inflation data.
- Broad U.S. Dollar (DXY): The dollar has staged a powerful recovery, with the DXY index rallying as the market prices in a more hawkish Fed under Kevin Warsh.
- EUR/USD: The pair is retreating towards the 1.1900 level as the dollar recovers. The euro’s recent rally has been driven by broad dollar weakness, but the prospect of a more hawkish Fed is now a major headwind. The pair is being hammered by the resurgent U.S. dollar. A massive $4.1B options expiry at the 1.1900 level provides a major resistance point.
- GBP/USD: The pound is weaker, with the pair trading around 1.3760 after the U.S. Senate reached a deal to avoid a government shutdown, providing a modest boost to the dollar.
- USD/JPY: The pair is on the defensive, with the yen weakening after a softer-than-expected Tokyo CPI report has tempered some of the market’s more aggressive BoJ rate hike expectations.
Cryptocurrencies: Bitcoin plunges to new 2026 low. The crypto crash deepened, with Bitcoin falling over 6.5% to a new year-to-date low below $82,000, erasing all of its recent recovery as the “risk-off” mood intensified. The sell-off was driven by the broader “risk-off” mood, the Microsoft-induced tech wreck, and the gold flash crash, which has wiped out all of the market’s recent recovery. Treasuries: U.S. Treasury yields are slightly lower as investors seek the safety of government bonds amidst the institutional and geopolitical turmoil. The benchmark 10-year yield is trading around 4.24%.
Looking Ahead
Today is shaping up to be another highly volatile session. The market will be hanging on President Trump’s every word as he announces his pick for the next Fed Chair. The choice of the perceived hawk Kevin Warsh could trigger another wave of selling in risk assets and a further rally in the U.S. dollar. This will be followed by the release of key U.S. PPI data and Canadian GDP, all of which have the potential to move markets. With a government shutdown now just hours away, traders should be prepared for a wild and unpredictable end to the trading week.
What to Watch Today
- The Fed Chair Announcement: This is the only event that matters. The choice of Kevin Warsh would be a major hawkish surprise and could trigger another wave of intense selling in stocks and bonds, while further boosting the dollar.
- The “Biblical” Flash Crash Aftermath: The market is still reeling from the historic crash in precious metals. The key question now is whether this was a one-off deleveraging event or the start of a more sustained downturn.
- The Shutdown Endgame: With a funding deadline just two days away, the market is on high alert for any news on a potential deal to avert another government shutdown.
- The Yen’s Intervention Whiplash: The market has been whipsawed by intervention talk, but the U.S. has now seemingly shut the door on a coordinated move. This leaves the Yen vulnerable to another sell-off if the BoJ remains cautious.
- The “Plaza Accord 2.0” Risk: The massive U.S. trade deficit is a major long-term headwind for the dollar. Fears of a “Plaza Accord 2.0” scenario, where a coordinated effort to weaken the dollar is enacted, will continue to linger.