The stock-market rout, which began soon after the opening bell on the New York Stock Exchange on Thursday, worsened as the day progressed, and by the end of the day trillions of dollars were wiped out of the market value. While tech stocks suffered the most damage but was not limited to it but extended to defensive fallbacks like Walmart Inc.
While concerns over artificial intelligence (AI) valuations and the future of data-centre investments initially put pressure on chipmakers and technology companies, Thursday's rout extended well beyond Big Tech. A basket of the most-shorted US stocks fell nearly 8%, unprofitable technology companies declined 7.7%, and the Russell 2000 index of smaller companies dropped 4.5%, pushing it into correction territory.
The widening sell-off reflects growing investor caution, with hedge funds reducing exposure to crowded trades, momentum strategies suffering sharp losses and large investors reluctant to step in and buy stocks during the decline.
The Nasdaq 100 plunged more than 6% on Thursday, its worst single-day fall since March 2020, while the S&P 500 declined 4.4%. The Philadelphia Semiconductor Index, which tracks major chipmakers, dropped 12%, also marking its worst session since March 2020, Bloomberg reported.
Democrats' sweeping victories in the US midterm elections have added a political dimension to concerns that were already weighing on technology stocks.