Worst US Stock Rout Since 2020 Leaves Virtually Nowhere to Hide
The fears had shadowed Wall Street off and on for months. Then, all at once, everyone rushed for the exits.
A stock-market tumble of historic proportions unfolded on Thursday, leaving virtually no company unscathed. The Dow Jones Industrial Average plummeted 1,833 points while the Nasdaq 100 Index declined over 6%, marking its worst drop since the Covid-19 pandemic crisis in March 2020. Even the S&P 500 saw a 4.4% loss. The devastation was felt across the tech sector, with Nvidia Corp. and semiconductor shares falling dramatically.
The artificial-intelligence boom, which had propelled stocks to record highs earlier this year, now faced a potential reckoning due to the Democrats' sweeping victory in the Congressional elections. This political shift may lead to policy changes that could curb the sector's explosive growth, eroding hundreds of billions of dollars in investment.
The selloff was fueled by fears that the AI boom was unsustainable and could burst like previous tech bubbles. Hedge funds dumped positions en masse, and investors rushed into Treasuries as a perceived haven. The rapid reversal of fortunes highlighted the risks of focusing too much on a single theme, with analysts warning that the AI frenzy had become excessive.
Even ETFs employing momentum-trading strategies experienced their worst day in over a decade. As the market grappled with the uncertainty, the Cboe Volatility Index surged to its highest level since 2018, signaling heightened investor fears and the potential for further declines.
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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