Sentiment Shifts Amid Tech Selloff and Crypto Pressure

Global markets extended losses for a second consecutive session, weighed down primarily by renewed selling in the technology sector and growing concerns over stretched valuations across equities. The correction followed a months-long rally fueled by optimism around artificial intelligence and expectations of Federal Reserve rate cuts. However, the recent pullback has exposed market fragility, particularly within overvalued sectors, while broader risk appetite remains under reassessment.

Equities: Tech Weakness Leads Global Decline

The Nasdaq 100 logged its steepest decline in nearly a month, with futures slipping another 0.3% in early trading. The selloff was concentrated in the so-called “Magnificent Seven,” where mixed earnings results triggered renewed caution. Super Micro Computer plunged following disappointing results, while Advanced Micro Devices fell after failing to meet investors’ lofty expectations.

Outside the tech-heavy benchmarks, broader equity losses appeared to ease. S&P 500 futures trimmed declines, while Russell 2000 small-caps showed early signs of stabilization. The Stoxx Europe 600 slipped 0.3%, and the MSCI World Index fell 0.2%, reflecting mild but widespread risk aversion.

The correction aligns with warnings from several Wall Street CEOs who cautioned investors to prepare for a 10–15% pullback from rich valuations. Capital Group’s Mike Gitlin, Goldman Sachs’ David Solomon, and Morgan Stanley’s Ted Pick all highlighted that while earnings remain resilient, equity valuations have exceeded long-term averages. The S&P 500 now trades at 23x forward earnings, above its five-year average of 20x, while the Nasdaq 100 sits near 28x, significantly higher than its 2022 multiple of 19x.

Market leaders view such corrections as “healthy resets” rather than signs of systemic stress. Investors are increasingly focusing on earnings quality, as dispersion between stronger and weaker companies is expected to widen into 2026.

Cryptocurrency: Long-Term Holders Add Pressure

The crypto market continued to weaken as Bitcoin fell sharply, dipping below $100,000 for the first time since June before partially recovering. The decline differs from previous leverage-driven selloffs; this time, the selling pressure is largely attributed to long-term holders liquidating positions. Over the past month, an estimated 400,000 BTC, valued around $45 billion, have been sold by long-term investors, eroding market conviction.

Data indicates that many of these coins had been dormant for 6–12 months, suggesting significant profit-taking since mid-summer. Futures liquidations, at roughly $2 billion in the last 24 hours, remain modest compared to last month’s $19 billion in forced unwinds.

The shift toward spot selling highlights declining accumulation by large holders (“whales”), while smaller institutional buyers remain cautious. Analysts warn that the ongoing unwinding could extend into mid-2026, with downside potential toward the $85,000 region before consolidation occurs.

Commodities and Currencies

Gold posted its first gain in four sessions, rising 0.8% to $3,964/oz, as investors sought safety amid equity volatility. WTI crude oil climbed 0.7% to $61.01/bbl, reflecting marginal improvement in energy sentiment despite ongoing tariff-related headwinds for auto manufacturers such as Toyota.

The US dollar traded broadly stable, while the euro hovered around $1.1481, the British pound near $1.3030, and the yen around ¥153.70. Bond markets were largely unchanged, with the 10-year US Treasury yield steady at 4.09%, suggesting that rate-cut expectations remain embedded ahead of upcoming US employment data.

Corporate and Political Highlights

• Novo Nordisk cut its sales outlook again, citing weaker demand for Ozempic and Wegovy, prompting investor concern over the sustainability of its growth narrative.
• Pinterest dropped after missing quarterly revenue targets, raising questions about digital ad growth heading into the holiday season.
• SoftBank and OpenAI announced plans to roll out AI solutions for Japanese businesses in 2026, an effort to monetize the technology beyond hype-driven valuations.
• In US politics, Zohran Mamdani’s historic election as New York City’s 111th mayor captured global attention. The 34-year-old democratic socialist campaigned on affordable housing, rent freezes, and universal child care, signaling a leftward shift in municipal governance. His victory underscores changing political sentiment in major US cities, with potential implications for corporate taxation and local economic policy.

Outlook

The short-term market tone remains defensive as investors digest stretched valuations, mixed corporate results, and uncertainty surrounding labor data amid the ongoing government shutdown. While long-term fundamentals such as earnings and AI-driven innovation remain supportive, near-term volatility is likely to persist as sentiment adjusts.

Equities may continue to consolidate as investors reprice risk and rotate toward undervalued sectors. Meanwhile, crypto markets could face extended liquidation phases before finding new equilibrium. With macro data visibility limited, caution is warranted, though selective buying opportunities are expected to emerge once valuations normalize.

Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.

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