What sparked the stock market’s $2.5 trillion sell-off? | AI stocks halt their brutal, worldwid…


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What sparked the stock market’s $2.5 trillion sell-off?

A stunning $2.5 trillion was wiped off the value of the tech-heavy Nasdaq on Thursday as investors rushed to dump tech stocks, rattled by fears that Democrats’ midterm victories could slow the AI buildout. But another force made the sell-off more brutal: Investors who had borrowed heavily to bet on the boom were under pressure to sell.

Hedge funds and other investors who borrow to make bigger bets may have to sell more stocks to cover losses and meet demands for cash, which can deepen a sell-off.

The market’s sudden reversal was striking: Futures initially fell when election results came in late Tuesday night, but on Wednesday morning, Wall Street had rallied as investors cheered Democrats’ gains. By Thursday, however, that optimism had given way to fears that Democrats could use their new political leverage to impose tighter regulation and rein in the AI buildout.

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