Risk appetite across Wall Street has cooled down sharply recently, as investors pull back from crowded trades in tech stocks, gold, and cryptocurrencies. Unlike last April’s sudden selloff that was tied to President Trump’s trade war, this decline has been driven by valuation concerns. This was evident on Thursday, when the S&P 500 (SPY) fell for a third straight day, and the Nasdaq 100 (QQQ) slid to its worst stretch since April.
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The selloff also spread across asset classes. Indeed, software stocks dropped again after Anthropic introduced a new AI model for financial research, which increased the competitive threat to existing businesses. Silver and Bitcoin plunged as well, and U.S. Treasuries rallied as investors searched for safety. It also didn’t help that after the close, Amazon (AMZN) slid by more than 8% after announcing plans to spend $200 billion on data centers and chips.
This unsettled investors who are worried about the payoff from massive AI spending. While earnings remain solid, investors are now more focused on risks tied to AI disruption, Fed uncertainty, and stretched valuations across various assets, such as crypto, gold, and big tech. Bitcoin was hit hardest, as it fell by about 13% to just over $63,000, which dragged down related assets and firms like Strategy (MSTR).
Is SPY Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SPY stock based on 406 Buys, 87 Holds, and 10 Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average SPY price target of $824.74 per share implies 21.7% upside potential.
