Risk-off sentiment dominated Wall Street on Friday, with selling pressure in AI-linked names intensifying and pushing technology stocks toward their worst week since April.
U.S. consumer sentiment plunged to its lowest since 2022, yet wealthy Americans grow more optimistic—highlighting a deepening K-shaped economy driven by AI disruptions, layoffs, and a booming stock market.
Wall Street is suddenly fixated on valuations again, with the Shiller CAPE—an inflation-adjusted, 10-year earnings metric—at the center of renewed caution across investor conversations.
After a brief and cautious rebound on Wednesday, risk-off sentiment returned sharply on Thursday, with AI-linked stocks leading a broad selloff across Wall Street and renewed pressure hitting crypto markets.
Wall Street bounced back Wednesday after Tuesday's sharp selloff in AI-driven stocks, as investors bought the dip amid solid corporate earnings and growing signs that the Federal Reserve may be nearing another interest rate cut.
Investors poured $37.6 billion into ETFs last week, led by SPY and tech-heavy funds, shrugging off Powell's hawkish tone as markets stay fixated on growth.
Risk appetite cooled on Tuesday as investors interpreted the latest batch of corporate earnings as solid but not spectacular, offering a convenient excuse to take profits after strong year-to-date rallies.
