TheDrop Market Analysis, 11/04/25

Markets failed as political elections nationwide invoke widespread uncertainty, and overvaluation bites top tickers into deep correction.

The S&P 500 index fell 1.2%, just ahead of the Dow Jones Industrial Average's 0.5% decline and below the 2% decline of the Nasdaq Composite, which fell by just over 2% during market hours. The VIX volatility index rose 10.66%, reflecting the quite sharp, at least relatively sharp, decline in stocks.

Most dangerous has been Bitcoin's slide, going below $100k per Bitcoin for the first time in several months as the crypto craze begins to cease, accompanied by losses in valuation from XRP, Ethereum, and other cryptocurrencies as the ongoing government shutdown (now the longest ever in American history) has threatened the liquidity of such non-traditional currencies. Both the U.S. Dollar and commodities like gold and silver also fell as a result, in contrary to their one-or-the-other, inverse relationship they held for quite some time.

Stocks fell as investors await key political election results, particularly the 2025 NYC Mayoral Election where the world's financial hub, including the NYSE, is located; Zohran Mamdani's campaign promises of raising taxes on the wealthy, greater regulations, and other factors invoked fear among investors, many of whom now support Cuomo (though, Mamdani ultimately prevailed in the general). Secondly, the continuous rise in stocks over the past two weeks have contributed to overvaluation, in turn leading to more natural rates of correction downward to more sustainable levels.

AI sentiments dwindled as earnings reports, from Palantir to AMD, failed to excite investors. Key player Michael Burry engaged in puts against Nvidia and Palantir as a result, raising alarms that the long-warned "AI bubble" could initiate. With demand for AI stagnating while spending & saturation rise, it may provoke significant economic impact on Mag. 7, AI-innovator, tech-heavy firms.