The US stock market crashed today, continuing a downward trend that started late last month. The tech-heavy Nasdaq 100 Index and its related ETFs, like the QQQ and JEPQ, tanked by over 1.5%. They have all dropped by nearly 5% from the highest level this year.
Reason Why the Stock Market is Crashing Today
The Nasdaq 100 Index and its associated ETFs plunged as investors remained concerned about the technology sector amid the potential AI disruption.
Data shows that software companies were among the top laggards, with AppLovin, Palantir, and Broadcom among the top laggards. Other top laggards this year are companies like Microsoft, Adobe, ServiceNow, and Intuit.
Software stocks have plunged as investors remain concerned about the potential disruption of top AI tools. For example, companies like LegalZoom and Verisk Analytics tumbled after Anthropic released a plugin focused on the legal industry.
However, some analysts believe the ongoing selling is an overreaction as these AI tools will not disrupt the software industry. Instead, it will complement it in the long term.
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The Nasdaq 100 Index is also plunging as investors question some key themes. For example, AMD stock price dropped by over 16% even though the company published strong results and boosted its outlook.
This decline is likely because the company, together with NVIDIA, is yet to receive authorization to sell in China. NVIDIA’s stock price remains in a correction after falling by over 15% from its highest level in 2025.
At the same time, there are signs that investors are rotating from tech-heavy stocks to value stocks. Indeed, the Dow Jones rose by over 50 points as the Nasdaq 100 Index slumped. The Schwab US Dividend Equity (SCHD) has jumped to a record high.
Crypto Market Crash and Geopolitical Tensions
The stock market crash is also happening because of the performance of the crypto industry, where Bitcoin dropped to $73,000. Ethereum dropped to $2,200, while other top tokens like Solana and Pi Network have slumped.
This is notable since some top companies in the crypto industry are constituents of the index. For example, Strategy stock dropped by 6.6% on Wednesday and is down by over 70% from its highest level in 2025.
The stock market is also plunging as investors remain concerned about geopolitics, with the rising possibility that Donald Trump will attack Iran now that a large armada has arrived in the region.
Iran has warned that any attack, no matter how small, will trigger a regional war. Its key option is to hinder transport at the Strait of Hormuz which will lead to higher crude oil prices. Indeed, data shows that Brent and West Texas Intermediate (WTI) have jumped to nearly $70.
The stock market is also going down as investors react to the nomination of Kevin Warsh to become the next Federal Reserve Chair. Warsh is widely seen as being a hawk who will leave interest rates higher for longer.
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