The Nasdaq 100 fell 6.4 per cent, erasing $2.5 trillion, as the VIX logged its biggest intraday spike in over 18 months.
Wall Street saw heavy selling on Thursday as investors sought guidance amid a rapid unravelling of the AI trade. Retail investors and hedge funds dumped stocks and traders rushed to hedge. The Nasdaq 100 index fell 6.4 per cent, erasing $2.5 trillion in market value, on investor fears that the Democratic Party’s sweeping midterm victory could stall AI infrastructure expansion. The Nasdaq Composite fell 5.5 per cent.
The Cboe Volatility Index (VIX), Wall Street’s most closely watched gauge of anxiety, jumped 11.75 points to an eight-month high of 28.36 and closed at 28.18. It logged its biggest intraday jump in more than 18 months. The selloff also sparked hefty hedging in the equity options market.
Analysts said much of the selling reflected an unwind of the previous session’s rally and of the crowded AI trade. John Flood, partner and managing director at Goldman Sachs, said hedge funds were selling pockets of the market, such as hyperscalers, that they had bought the previous day. Analysts also attributed some of the decline to investors getting ahead of anticipated selling from strategies that react to market volatility.
Source: Reuters
