Finance

Wall Street Reels: How Earnings, Shutdown Fears, and Fed Signals Triggered a Market Rout

U.S. stocks and Bitcoin fell sharply due to earnings reports, government shutdown, and Fed’s cautious stance.

November 6, 2025, 3:53 PM

Stock trader in a navy jacket intently watching multiple financial charts at the NYSE.

A stock trader intently monitors multiple screens displaying financial charts at the New York Stock Exchange. By orhan akkurt / Shutterstock.com.

Executive Summary

U.S. equity markets, including the S&P 500, Dow, and Nasdaq, each declined over 1% on Thursday, influenced by corporate earnings, valuation concerns, and the impact of the prolonged government shutdown.

Bitcoin’s price dropped to approximately $107,000, primarily due to the Federal Reserve’s cautious stance on future interest rate cuts and a significant withdrawal of funds by institutional investors.

Analysts warn Bitcoin could fall to $88,000 if it fails to hold above the $113,000 resistance level, though a “Santa Rally” in December remains possible if the Fed eases monetary policy.

The Story So Far

U.S. equity markets are experiencing declines and Bitcoin is plunging primarily due to a prolonged U.S. government shutdown, which is creating economic uncertainty and directly impacting sectors like airlines. This is compounded by the Federal Reserve’s cautious stance on interest rates, as Chair Powell’s remarks dampened optimism about future rate cuts, leading to widespread selling in risk assets, alongside ongoing concerns about high market valuations, particularly in the technology sector.

Why This Matters

The broad decline across U.S. equities and Bitcoin signals heightened investor caution and a retreat from risk assets, driven by concerns over corporate valuations, the Federal Reserve’s cautious stance on interest rates, and global economic tensions. This environment suggests that market volatility is likely to persist, exacerbated by the prolonged government shutdown which is not only obscuring vital economic data but also directly impacting key sectors like airlines, potentially prolonging economic uncertainty.

Who Thinks What?

Investors are reacting to mixed corporate earnings reports, concerns over market valuations, and the impact of a prolonged U.S. government shutdown on economic data and specific sectors like airlines, leading to broad declines in U.S. equities.

The Federal Reserve’s cautious stance on interest rates, particularly Fed Chair Jerome Powell’s emphasis that a December rate cut was not guaranteed, dampened market optimism and triggered widespread selling across risk assets, including Bitcoin.

Analysts warn that Bitcoin faces a risk of further declines if it fails to maintain above key resistance levels, attributing current selling pressure to investor caution and profit-taking, but also speculate about a potential “Santa Rally” in December if the Fed injects liquidity.

U.S. equity markets experienced a broad decline on Thursday, with the S&P 500, Dow Jones Industrial Average, and Nasdaq composite each falling over 1%, as investors reacted to a new round of corporate earnings reports and ongoing concerns about market valuations. Concurrently, Bitcoin faced significant selling pressure, dropping to approximately $107,000, attributed to the Federal Reserve’s cautious stance on interest rates and broader market sentiment.

U.S. Equities Decline Amid Earnings and Shutdown Concerns

Major U.S. stock indexes saw significant losses, with the S&P 500 dropping 1%, the Dow Jones Industrial Average falling 449 points (1%), and the Nasdaq composite declining 1.6%. Technology stocks were particularly impacted, with high-value companies exerting outsized influence on the market’s direction.

Nvidia shares fell 2.4%, Microsoft slipped 1.9%, and Amazon declined 2.6%. The food delivery app DoorDash saw one of the sharpest drops on Wall Street, sinking 15.1% after warning investors of significantly increased spending on product development next year. Conversely, software company Datadog jumped 21.1% and Rockwell Automation rose 4.8% following earnings reports that surpassed analysts’ forecasts.

The market’s performance this week has been characterized by volatility, following record highs set last week. Concerns about potential overvaluation, particularly among large technology companies that have led the market’s ascent fueled by artificial intelligence advancements, are under scrutiny. Corporate earnings are being closely monitored to justify current market valuations and to provide economic insights amid a prolonged U.S. government shutdown, which has limited broader economic data on inflation, employment, and retail sales.

The government shutdown, now the longest on record, is directly impacting sectors such as airlines due to critical staffing problems at airports. The Federal Aviation Administration (FAA) announced a 10% reduction in air traffic starting Friday across 40 “high-volume” markets. This news contributed to declines in airline stocks, with American Airlines falling 2.4%, Delta Air Lines 1.8%, and United Airlines 2.7%. In the bond market, Treasury yields also moved lower, with the yield on the 10-year Treasury falling to 4.09% and the two-year Treasury to 3.56%.

Bitcoin Plunges Amid Fed Caution and Investor Retreat

Bitcoin’s price dropped to around $107,000, with analysts warning of potential further declines to as low as $88,000 if market sentiment does not improve. The primary catalyst for this slide was the Federal Reserve’s cautious tone following its recent interest rate decision.

Despite a rate cut last week and signals to end quantitative tightening by December, Fed Chair Jerome Powell’s emphasis that another December cut was not guaranteed dampened market optimism. Data from the CME FedWatch Tool indicated a significant drop in the odds of a December rate cut, leading to widespread selling across risk assets, including cryptocurrencies.

Adding to the bearish sentiment, the Crypto Fear and Greed Index remained in the “fear” zone, reflecting investor caution. Institutional investors also showed signs of withdrawal, with nearly $800 million reportedly pulled from Bitcoin and Ethereum ETFs last week. Long-term investors contributed to the downward pressure by taking profits, with data from Coinglass indicating over 100,000 BTC sold in October, breaking the cryptocurrency’s typical “Uptober” bullish streak with a 3.7% decline for the month.

Global economic tensions, including trade disputes between the U.S. and China, uncertainty surrounding oil prices, and geopolitical risks, have also prompted investors to shift towards safer assets like the U.S. dollar and gold. A negative Bitcoin price premium on Coinbase, observed in late October and early November, further signaled reduced U.S. buying interest and increased selling pressure among retail investors.

According to Coinglass, Bitcoin faces a risk of falling to $88,000 if it fails to maintain above the $113,000 resistance level, which represents the cost basis for short-term holders. Analysts suggest that a sustained break below this level could trigger further selling. The $88,000 mark aligns with Bitcoin’s realized price, historically acting as a strong support during corrections. However, a sustained close above $113,000 could negate the bearish outlook and open the door for a short-term rebound.

Market Outlook

With few major catalysts anticipated in November, Bitcoin may continue to trade within a range of $107,500 and $123,000. Market uncertainty concerning U.S. economic data and the potential for a prolonged government shutdown could sustain elevated volatility. Some analysts, however, speculate that a “Santa Rally” could emerge in December if the Fed proceeds with plans to end quantitative tightening and potentially implement further rate cuts, which might inject liquidity and optimism back into the crypto market.