Nasdaq 100 posts worst day since 2020 as AI stocks crash

The Nasdaq 100 suffered its worst day since March 2020, falling 6.4% and erasing $2.3 trillion in market value. The S&P 500 dropped 4.4% and the Dow Jones lost 3.4%, wiping out gains from the previous day's Democratic election victory. The Philadelphia Semiconductor Index fell over 12%, recording its second-largest daily loss of the century. Nvidia dropped 9.3%, losing nearly $450 billion in value, though one report noted it lost 10% at one point, wiping out $500 billion. Broadcom fell 10%, Qualcomm 9.5%, and ARM 12%. Storage stocks Seagate, Western Digital, and Sundisk lost up to 22%, while Micron fell 17.5% after reports of a delayed Taiwan plant. Neoclouds like CoreWeave fell 10-17%. Tesla dropped nearly 11% and SpaceX 9%, with both losing a combined $420 billion in value since Tuesday. The VIX spiked over 60%. FINRA data showed investors took out $1.5 billion in margin debt in September, up $350 billion year-over-year. Hedge funds reduced positions as much as in 10 years. Michael Burry sold a quarter of his put options on the Van Eck semiconductor ETF. The 10-year US Treasury yield fell to 4.8%, the lowest in two months, while Bitcoin dropped 5%. Analysts characterize the move as a severe sector rotation and correction driven by political risks to AI infrastructure and doubts about AI profitability, rather than a broad market crash. Investor Joachim Pech views it as a rotation, noting that AI infrastructure is a strategic US-China competition issue, and suggests buying quality companies in tranches during the dip.