On Thursday, US stocks experienced their most dramatic intraday reversal since April, with benchmark indices plunging to their lowest levels in over two months—leaving Wall Street traders baffled and scrambling to pinpoint the exact cause. While the Nasdaq 100 plummeted nearly 5% from its intraday high without an obvious trigger, market speculation about the sell-off ran rampant.
Some traders pointed to renewed concerns over whether AI projects can generate sufficient revenue or profits to justify massive tech spending. Others cited the unexpectedly strong September jobs report as the latest sign that the Federal Reserve will hold off on further rate cuts this year. Bitcoin’s drop to a six-month low also contributed to risk-off sentiment, while worries over stretched stock valuations and heightened volatility ahead of Friday’s options expiration added to the pressure.
Whatever the reason, the sell-off erased early-session optimism that had suggested a continued rebound from October’s record highs. Initially, strong earnings from AI chip leader NVIDIA (NVDA.US) and Walmart’s (WMT.US) upbeat consumer spending report had buoyed sentiment—only to be overshadowed by a sudden, relentless wave of selling.
The S&P 500 surged 1.9% within the first hour of trading but reversed all gains, closing down 1.6% and wiping out over $2.7 trillion in market value. The VIX volatility index, a measure of expected stock turbulence, closed above 26 for the first time since April. The tech-heavy Nasdaq 100 led the decline, dropping 2.4% and extending its pullback to 7.9% from its October 29 peak.
Mega-cap tech stocks like Tesla (TSLA.US), Google (GOOGL.US), Apple (AAPL.US), Microsoft (MSFT.US), Broadcom (AVGO.US), and Amazon (AMZN.US) each saw over $100 billion in market cap swings. The Nasdaq 100’s volatility gauge (VXN) surged past 32 for the first time since April, with $3.1 trillion in options set to expire Friday—including $1.7 trillion tied to the S&P 500.
NVIDIA, despite beating revenue forecasts, dragged the Nasdaq 100 hardest—its shares tumbled 3.2% after an early 2.4% gain, erasing nearly $400 billion from its intraday peak as doubts resurfaced about AI spending sustainability. The S&P 500 has now fallen over 5% from its October high, breaching its 100-day moving average for the first time since February and closing at its lowest since September 11.
The sell-off hit riskier segments hardest: a basket of heavily shorted stocks dropped 3.5%, while Goldman Sachs’ unprofitable tech index slid 3.7%. The Russell Microcap Index fell 1.9%, down 10% from recent highs.
**Market Perspectives:** - **Brent Schutte (Northwestern Mutual Wealth Management):** "NVIDIA’s performance must be viewed against unresolved macro concerns—labor market strength, tariffs, inflation, Fed policy, AI sustainability, valuations, private credit risks, and crypto pullbacks." - **Frank Monkam (Buffalo Bayou Commodities):** "Crypto’s bear market reveals retail fragility—the same force that drove rallies since spring." - **Sameer Samana (Wells Fargo Investment Institute):** "NVIDIA’s beat wasn’t enough to ease valuation fears or concerns over debt-fueled growth neglecting shareholder returns." - **Steve Sosnick (Interactive Brokers):** "Bitcoin testing $90K matters—it’s a barometer for risk appetite." - **Chris Murphy (Susquehanna International Group):** "With Fed cuts unlikely and CTAs still exposed, systematic selling could worsen." - **Greg Taylor (PenderFund Capital Management):** "Early optimism was just short-covering. Now, reality checks set in." - **Matt Maley (Miller Tabak):** "Can AI profitability match today’s priced-in hype? Traders doubt it." - **Craig Johnson (Piper Sandler):** "NVIDIA relieved nerves, but market breadth needs time to heal."
