FinanceReuters

Phones 'explode' on Wall Street as 'steamroller' shows up for the AI trade

Wall Street had a rough day as investors dumped AI stocks after the US midterm results, wiping $2.5 trillion from the Nasdaq 100 in a single session.

Phones rang off the hook on Wall Street on Thursday as fear-stricken investors sought guidance from the rapid unraveling of ​the AI trade.

The Long Sip
What happened

The Nasdaq 100 fell 6.4% on Thursday, erasing $2.5 trillion in market value as investors feared the Democratic midterm victory could slow AI infrastructure spending.

The detail

Wall Street's fear gauge, the VIX, jumped nearly 12 points to an eight-month high of 28.36 as hedge funds and retail investors rushed to sell AI and semiconductor stocks.

What it means

Analysts say the selloff reflects an unwinding of a crowded AI trade that has driven markets for months, adding more uncertainty to an already shaky outlook.

Full story at Reuters

What readers are saying

trev1986
The VIX jumping to 28.36 shows just how fast fear took over after that Nasdaq drop. Retail investors who normally buy the dip disappeared today and that absence made the unwind even worse. Watch how the put premiums are sitting at twice their usual level across the index products.
RetiredBanjo
Nomura expects leveraged ETFs to sell about 47 billion dollars into the close mostly from tech and AI focused funds. That is the second largest amount in their records since July 2006 and explains why the selling accelerated near the end of the session.
Gordy
Check the options activity before you add fresh hedges. The article shows many traders are taking profits on existing ones at the same time as new protection is being bought.
kath1950
The drop in single stocks proves that retail investors completely lost their nerve once the VIX jumped to an eight month high.
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