Software stocks plunge, dragging down US stocks; the Nasdaq drops over 1%, gold briefly returns to the 5000 level, silver rises over 7%, and Bitcoin once fell more than 7%

Due to concerns that the new AI tools released by Anthropic could disrupt existing business models, the technology sector, especially software stocks, experienced the most severe large-scale sell-off since April last year. Funds rapidly flowed out of tech stocks and into smaller-cap stocks, value stocks, and gold, which are seen as more economically sensitive.

Wall Street Insights mentioned that the AI startup Anthropic’s new automation tools triggered a panic sell-off in software stocks, marking the biggest decline since April last year.

(U.S. software stocks continued to decline intraday)

Large tech stocks were hit hard, with the Tech Seven Giants Index falling 1.5%, performing far worse than the S&P 493 Index. The S&P 500 declined 0.8%, but the Russell Small Cap Index rose 0.3% against the trend.

Notably, during Tuesday’s sell-off, legal software stocks and data service companies were hit hardest. Thomson Reuters (TRI) plunged as much as 20.7% intraday, and LegalZoom.com closed down over 20%.

Investors are worried that the core businesses of software companies are facing threats of being replaced by AI technology. Morgan Stanley analysts like Toni Kaplan pointed out in a research report that the new features launched by Anthropic in the legal field have intensified industry competition, and he said:

We see this as a signal of increased competition, which could have a negative impact.

The iShares Expanded Tech-Software Sector ETF (IGV), which tracks the tech software sector, hit a daily low and fell 5.6% intraday. It has now declined for six consecutive trading days, with a total drop of over 14% over the six days.

Panic also spread to private credit stocks, including Blue Owl Capital, as market concerns about companies holding large software industry exposure intensified. Media reports pointed out that such industry turbulence fears have triggered credit market shocks globally.

Despite the decline in tech stocks, most stocks in the S&P 500 actually rose. As a barometer of the economy, FedEx continued its record-breaking rally. Walmart’s market cap surpassed $1 trillion. Steve Sosnick of Interactive Brokers said:

The market is rotating, and the tricky question is whether this is a healthy asset allocation adjustment or a sign of some underlying instability.

U.S. Treasury yields edged lower, with the 10-year yield down 0.6 basis points to 4.266%. The dollar retreated after recording its biggest two-day rally since April.

Cryptocurrency movements are highly correlated with tech stocks. Bitcoin’s price fell sharply, dropping over 7% at one point and breaking below April 2023 lows. Ethereum also rebounded sharply at the close but still declined 2.56%, approaching the $2,100 level.

Notably, Bitcoin, known as “digital gold,” is trading at its lowest level since October 2023 relative to physical gold.

While the stock market is experiencing “bloodshed,” the commodities market has become a “safe haven” for funds. Spot gold rebounded sharply by 6.2%, approaching $5,000 at one point. Silver surged up to 12% intraday, then retraced but still gained over 7%.

Wall Street Insights reported that the U.S. military shot down an Iranian drone in the Arabian Sea. Following the news, international crude oil futures surged and hit new daily highs at the start of the U.S. stock market midday. U.S. WTI crude rose to $63.74, up nearly 2.6% intraday, and Brent crude reached $67.87, up nearly 2.4%.

On Tuesday, the network stock index ETF fell over 3.3%, leading the decline among U.S. industry ETFs, while the S&P Energy sector rose about 3.3%.

Major U.S. stock indices:

• S&P 500 closed down 58.63 points, down 0.84%, at 6917.81.

• Dow Jones Industrial Average fell 166.67 points, down 0.34%, at 49240.99.

• Nasdaq declined 336.922 points, down 1.43%, at 23255.185. Nasdaq 100 fell 399.993 points, down 1.55%, at 25338.21.

• Russell 2000 rose 0.31%, at 2648.50.

• The VIX fear index declined 6.31%, to 16.34.

U.S. industry ETFs:

• Network stock ETF down 3.32%, semiconductor ETF down 2.52%, tech sector ETF down 2.19%, global tech stock ETF down 1.88%.

(U.S. industry sector ETFs on February 3)

The Magnificent 7 tech giants:

• The U.S. tech stocks index of the Magnificent 7 fell 1.68%, to 203.68 points.

• Tesla rose slightly by 0.04%, Apple fell 0.02%, Google fell 1.16%, Amazon down 1.79%, Meta down 2.08%, Nvidia down 2.84%, Microsoft down 2.87%.

Chip stocks:

• Philadelphia Semiconductor Index fell 2.07%, to 7966.334.

• TSMC ADR down 1.60%, AMD down 1.69%.

Chinese concept stocks:

• Nasdaq Golden Dragon China Index declined 0.94%, to 7610.01.

• Among popular Chinese concept stocks, Daqo New Energy fell 5.6%, Bilibili down 4%, Kingsoft Cloud down 3.5%, Alibaba down 2.9%, Baidu, Ctrip, Boss Zhipin, KE Holdings all down over 2%.

Other stocks:

• Circle down 4.49%.

European stock markets hit record closing highs, with mining stocks like Polymetal leading. Italy’s banking sector also reached record closing highs, while the Dutch stock market fell over 1.5%.

Pan-European indices:

• The STOXX 600 index closed up 0.10%, at 617.93, continuing to reach record closing highs, rebounding 1.78% over the past three trading days.

• The Eurozone STOXX 50 index declined 0.20%, to 5995.35, opening high and closing low.

Country indices:

• Germany DAX 30 closed down 0.09%, at 24775.35.

• France CAC 40 closed down 0.02%, at 8179.50.

• UK FTSE 100 closed down 0.26%, at 10314.59.

(Performance of major European indices on February 3)

Sectors and individual stocks:

• Among Eurozone blue chips, Siemens Energy rose 4.70%, ING rose 3.08%, Saint-Gobain rose 2.18%, UCB rose 2.16%, ranking fourth.

• All components of the STOXX 600 index saw Poland’s KGHM rise 8.90%, Cie de Saint-Gobain up 7.71%, BAE Systems up 7.25%, Plus500 up 7.02%, ranking fourth in gains.

U.S. Treasury yields edged slightly lower, with the 10-year yield down 0.6 basis points to 4.266%. The 30-year German bond yield rose over 3 basis points.

U.S. Treasuries:

• NY close, 10-year U.S. Treasury yield down 0.79 basis points, at 4.2695%.

• 2-year U.S. Treasury yield down 0.41 basis points, at 3.5675%; 30-year yield down 0.83 basis points, at 4.9035%.

(Major U.S. Treasury yields)

Euro bonds:

• At the close, German 10-year government bond yield up 2.3 basis points, at 2.891%, trading between 2.874% and 2.903% intraday.

• UK 10-year government bond yield up 1.1 basis points, 2-year UK bond yield up 0.5 basis points.

• France, Italy, Spain, Greece 10-year yields all rose an average of 1.48 basis points.

Bloomberg dollar index fell about 0.3%. Cryptocurrency prices plunged intraday. Bitcoin once fell over 7%, breaking April 2023 lows; Ethereum plunged about 9%, approaching $2,100. Both rebounded significantly at the close but still declined overall.

Dollar:

• NY close, ICE dollar index down 0.20%, at 97.440, trading range 97.692-97.298.

• Bloomberg dollar index down 0.28%, at 1188.41, trading range 1191.57-1187.31. (Bloomberg dollar index)

Non-dollar currencies:

• NY close, EUR/USD up 0.23%, GBP/USD up 0.24%, USD/CHF down 0.31%.

• USD/JPY up slightly by 0.08%, at 155.76 yen.

Offshore RMB:

• NY close, USD/CNH at 6.9351, up 75 points from Monday’s NY close, trading within 6.9437-6.9309.

Cryptocurrencies:

• NY close, Bitcoin once fell over 7%, breaking April 2023 lows.

(Bitcoin price)

• Ethereum plunged about 9%, approaching $2,100; both rebounded significantly at the close but still declined overall.

WTI March crude oil futures rose $1.07, up 1.72%, to $63.21 per barrel.

Crude Oil:

• WTI March futures up $1.07, up 1.72%, at $63.21/barrel. (WTI crude oil futures)
• Brent April crude futures at $67.33 per barrel.

Natural Gas:

• NYMEX March natural gas futures at $3.3110 per million British thermal units.

Spot gold rebounded sharply by 6.2%, approaching $5,000. Silver surged up to 12% intraday, then retraced but still gained over 7%.

Gold:

• NY close, spot gold up 5.96%, at $4939.38 per ounce. (Spot gold price)
• COMEX gold futures up 6.94%, at $4975.30 per ounce.

Silver:

• NY close, spot silver up 7.36%, at $85.0929 per ounce. (Spot silver price)
• COMEX silver futures up 11.05%, at $85.505 per ounce.

Other metals:

• NY close, COMEX copper futures up 4.47%, at $6.0960 per pound.
• Spot platinum up 4.08%, spot palladium up 1.82%.
• LME copper up $586, at $13,478 per ton. LME tin up $3,531, at $50,122 per ton. LME nickel up $620, at $17,447 per ton.

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