Closing Recap 

U.S. stocks suffered another brutal day of selling on Thursday, with the major indices plunging as the rout in the technology sector intensified and spread to the broader market. The Nasdaq fell over 2%, the S&P 500 dropped 1.57%, and the small-cap Russell 2000 was also hit hard. The selling was driven by a perfect storm of negative catalysts: a slew of weak U.S. jobs data, growing fears of an AI bubble, and a catastrophic collapse in the cryptocurrency market. Bitcoin plunged to its lowest level since October 2024, now down 50% from its all-time high, in a move that is creating a powerful risk-off dynamic across all asset classes. In a sign of the growing fear, precious metals were hit by another wave of heavy selling, while crude oil also tumbled. 

Key Takeaways 

• Broad Market Sell-Off: All major indices fell over 1%, with the tech-led rout now spreading to the broader market as risk aversion intensifies. The S&P 500 is down for a third straight day. 
• Tech Wreck Continues, Equal Weight Outperforms: The Nasdaq plunged 2.03% as the brutal sell-off in AI-related names continues. In a sign of the narrowness of the recent rally, the equal-weight S&P 500 is outperforming the cap-weighted index by its widest margin in over 20 years. 
• $3.6 Trillion Wipeout: A “Liquidity Air Pocket” hit global markets. In a brutal 90-minute window, Gold (-3.7%), Silver (-8.5%), Stocks (-1.6%), and Crypto (-3%) all puked simultaneously. This is the hallmark of a forced margin unwind.
• Crypto Crash Deepens, Bitcoin Plunges to 16-Month Low: The crypto market is in a state of freefall. Bitcoin has now crashed 50% from its October high, plunging to its lowest level since October 2024, as a massive wave of liquidations continues. Over $2 trillion has been wiped from the total market cap. 
• Weak Jobs Data Signals Economic Slowdown: A slew of weak U.S. jobs data, including a surge in jobless claims and a spike in announced layoffs to a 17-year high, is fueling fears of a looming recession and boosting bets for a March Fed cut. 
• Precious Metals Hit by Heavy Selling: Gold fell 2.94% and silver plunged a stunning 9.81% as a stronger dollar and broad market deleveraging weighed on the metals after their recent volatile run. 
• Bitcoin in “Bear Cycle”: Bitcoin is struggling to hold $66,000, now down 50% from the October peak. Wolfe Research warns that historical cycles suggest a drawdown to $30,000 is possible if the $60k support fails.
• All Eyes on U.S. CPI: The final major risk event of the week is today’s delayed U.S. January CPI report, which will be critical in shaping the Fed’s outlook after this week’s weak jobs data. 
• Insider Selling at Historic Highs: A major red flag for the market, corporate insiders are dumping shares at the fastest pace in recorded history, a potential sign of a market top. 
• Leveraged ETFs Add to Selling Pressure: Leveraged ETFs were forced to sell a massive $18 billion in U.S. equities on Tuesday, one of the largest forced selling days ever, exacerbating the downdraft in tech. 
• BofA’s Contrarian “Sell Signal” Flashes: Bank of America’s Bull & Bear Indicator has surged to a 20-year high, a contrarian signal that has preceded sharp market pullbacks in the past. 
• CPI “Binary Event” Today: JPMorgan warns that today’s CPI is a coin toss. A hot print (>0.4% MoM) could trigger another 2.5% drop in the S&P 500, while a soft print is needed to save the week.

Market Overview

Thursday’s session was a wakeup call. The reckoning on the AI trade has arrived, and it is brutal. Thursday’s session saw another wave of heavy selling sweep through the technology sector, with the very names that have led the market to all-time highs now leading the charge to the downside. This is no longer just a healthy correction; it’s a crisis of confidence in the entire AI narrative, with investors now seriously questioning the profitability of the massive spending boom. The selling pressure has now clearly spilled over into the broader market, creating a powerful risk-off dynamic. This micro-level panic is being amplified by a series of macro shocks. The most dramatic and potentially systemic risk is the unfolding situation in the crypto market. 

Index	Up/Down	%	Last
DJ Industrials	-669.28	-0.0134	49452
S&P 500	-108.72	-0.0157	6832
Nasdaq	-469.32	-0.0203	22597
Russell 2000	-53.64	-0.0201	2615

The catastrophic collapse of Bitcoin, which has now wiped out over $2 trillion in value and is hitting 16-month lows, is a clear sign of a massive deleveraging event that could have broader contagion effects. At the same time, a slew of weak U.S. jobs data is painting a picture of a rapidly cooling labor market, fueling fears of a looming recession. While some strategists are calling for investors to “buy the dip,” the current price action, combined with a surge in insider selling and a “sell signal” from Bank of America, suggests that the path of least resistance is lower.

Economic Calendar 

With the U.S. government back online after a brief shutdown, this week has seen a flood of key economic data. Today is CPI Day. This is the most important data point of the month. The market is fragile, and a hot number could break the back of the bull trend. Data Released Yesterday / Overnight: 

• U.S. Weekly Jobless Claims: Surged to 227K, well above the 222K forecast, a clear sign of a weakening labor market. 
• U.S. Challenger Job Cuts (Jan): Spiked to 108,435, the highest January total since 2009, led by cuts at UPS and Amazon. 
• BoJ Adviser Signals No March Hike: An adviser to Prime Minister Takaichi played down the need for a March BoJ rate hike, providing some modest relief for the yen. 

Today’s Economic Calendar: 

• European Session: An extremely light calendar with only Swiss CPI and Eurozone Q4 GDP released. 
• U.S. Session: The main event is the delayed U.S. January CPI report. The headline rate is expected to cool to 2.5% y/y, with the core rate also seen at 2.5%. 
• 13:30 GMT (8:30 ET) – US CPI (Jan). Headline Est: 2.5% YoY / 0.3% MoM. Core Est: 2.5% YoY / 0.3% MoM. 
• 13:30 GMT – US Core CPI. The key number. Needs to be 0.3% or lower. 
• 15:00 GMT – Univ. of Michigan Consumer Sentiment. 
• 17:00 GMT – Fed’s Jefferson Speaks.

Asset Class Spotlight: FX, Commodities, Bonds & Crypto

After a brief recovery, precious metals were hit by another wave of heavy selling – the great flush. Gold fell 2.94% and silver plunged a stunning 9.81% as a stronger dollar and broad market deleveraging weighed on the metals. Gold collapsed $150 to close at $4,948.50. The leverage washout is brutal. Silver was decimated, falling nearly 10% to $75.68. The “Shanghai Squeeze” narrative was overpowered by margin calls. Crude oil prices also fell, with WTI settling down 2.77% at $62.84 a barrel as concerns about a global supply glut and a slowing economy outweighed geopolitical risks.

Asset	Up/Down	Unit / % Change	Last
WTI Crude	-1.79	-0.0277	62.84
Gold	-150.1	-0.0294	4948.5
Silver	-8.24	-0.0981	75.68
EUR/USD	-0.0001	-0.0001	1.186
USD/JPY	-0.36	-0.0023	152.88
10-Year Note Yield	-0.081	-0.0193	0.04102

The U.S. dollar is finding a bid as risk aversion takes hold, while the pound is under pressure from a dovish BoE. 

• EUR/USD: The pair is under pressure, with sellers showing interest below the 1.1850 level. The euro is being weighed down by a stronger U.S. dollar and fears that AI disruption could hit the Eurozone economy. A massive $3.4 Billion option expiry at 1.1850 is acting as a magnetic floor this morning. The Euro is waiting for the US CPI to decide its fate. A hot US CPI sends this below 1.1800; a cool print targets 1.1950.
• GBP/USD: The pound is on the back foot, with the pair falling towards the 1.3600 level. A weak UK GDP print has reinforced bets for a March BoE rate cut, weighing on the currency. 
• USD/JPY: The pair is finding some support, trading above the 153.00 level. While the long-term outlook for the yen is bullish, the broader risk-off mood and a slight pullback in BoJ hike bets are providing a near-term tailwind for the dollar.  While BoJ advisers are downplaying a March hike, the geopolitical tension and the massive unwinding of the carry trade are keeping the Yen bid. Watch 153.50 as resistance.

Cryptocurrencies: Bitcoin is trading heavy at $66,460. The correlation with the Nasdaq is punishing crypto. With $1.7 Trillion wiped out since October, the “digital gold” narrative is failing the stress test. The crypto market is in a state of freefall. Bitcoin has now crashed over 50% from its October high, plunging to a 16-month low below $61,000. The collapse is being driven by a massive deleveraging event, with over $8.5 billion in liquidations in just over a week. The total crypto market cap has now lost $2 trillion since the peak. Treasuries: U.S. Treasury yields fell sharply as investors piled into the safety of government bonds. The benchmark 10-year yield dropped 8.1 basis points to 4.102%, reflecting growing fears of a looming recession. 

Looking Ahead 

Today is all about the U.S. inflation report. After a week of brutal selling and a slew of weak jobs data, the January CPI print will be a critical test for the market. A softer-than-expected number could revive hopes for aggressive Fed easing and potentially spark a “buy the dip” rally. However, a hot number would be the worst of all worlds, raising the specter of stagflation and likely triggering the next major leg down for risk assets. The market is sitting on a knife’s edge. The massive liquidation in commodities and tech suggests that “forced selling” is taking place. Today’s CPI is the binary catalyst: 

• Hot CPI (>0.4% MoM): The nightmare scenario. Bonds sell off (yields up), Tech crashes further, and the Dollar rips higher. 
• Cool CPI (<0.3% MoM): The savior scenario. A short-squeeze rally could ignite, particularly in Gold and beaten-down Software stocks.

What to Watch Today 

• CPI “Core Services”: Forget the headline. Watch “Supercore” inflation (Services ex-Housing). If this remains sticky, the Fed cannot cut, and the “Warsh Pivot” narrative takes a hit. 
• Silver “Dead Cat” or “Death Spiral”?: Silver crashed 10% yesterday. Watch the open. If it fails to bounce, the liquidation isn’t over. A break below $74 opens the trapdoor to $70. 
• Japan/China Tension: The seizure of the Chinese vessel is a major escalation. Watch for any retaliation rhetoric from Beijing. This would be bullish for Gold and the Yen (Safe Havens) but bearish for risk assets. 
• 0DTE Volatility: With 78% of Nasdaq volume in 0DTEs, expect wild swings after the CPI release at 8:30 AM ET. The liquidity is shallow, and moves will be exaggerated.