Tech Sell-Off Deepens, Labor Market Weakens, Bitcoin Plunges
Financial markets experienced a significant downturn on February 5, 2026, as investor anxieties surrounding artificial intelligence spending and a softening labor market fueled a broad sell-off. The Nasdaq Composite led the decline, falling 1.6%, while the S&P 500 and Dow Jones Industrial Average also posted substantial losses.
The S&P 500 closed at 6,798.40, down 84.32 points, a decrease of 1.2%. The Dow Jones Industrial Average finished at 48,908.72, losing 592.58 points, or 1.2%. The tech-heavy Nasdaq Composite ended the day at 22,540.59, down 363.99 points, representing a 1.6% drop.
Despite a generally positive earnings season, concerns about the substantial capital expenditures required to support AI infrastructure are weighing on investor sentiment. Alphabet, Google’s parent company, announced plans to invest up to $185 billion in capital investments to accommodate new technology on February 4. While the stock partially recovered to close down only about 0.6% on Thursday, the initial reaction highlighted the market’s sensitivity to AI-related spending.
The pressure intensified after the market closed when Amazon released its earnings report, which reportedly missed expectations, sending shares down as much as 9% in after-hours trading. Investors are particularly focused on the performance of Amazon Web Services (AWS), the company’s cloud computing unit, which was expected to deliver a 21% increase in sales.
Adding to the market’s woes, economic data released on Thursday painted a picture of a weakening labor market. Planned job cuts are at their highest level since 2009, and the number of job openings has declined, signaling potential challenges ahead for economic growth.
The cryptocurrency market also experienced turbulence, with Bitcoin plummeting to its lowest level since 2024. The decline followed a statement from famed investor Michael Burry, known for his accurate prediction of the 2008 financial crisis, who warned that a falling Bitcoin price could trigger a “death spiral” leading to significant value destruction. Burry suggested that some investors may be forced to liquidate other assets to cover losses.
Contributing to the risk-off sentiment, Treasury Secretary Scott Bessent stated on February 4 that the U.S. Government would not intervene to support Bitcoin or other cryptocurrencies by purchasing them. This announcement removed a potential source of stability for the volatile asset class.
As of the close of trading, Bitcoin was trading around $63,458, a decline of more than 13%. Gold also experienced a sell-off, falling another 2.5% to approximately $4,826 an ounce. Even government bonds were not immune to the market’s anxieties, with the benchmark 10-year U.S. Treasury yield sliding nearly 7 basis points to around 4.206%.
The Nasdaq Composite is now more than 3% lower for the year to date, reflecting the ongoing challenges facing the technology sector and the broader market.