U.S. stocks lose $3.7 trillion as selling spreads

U.S. stocks shed approximately $3.7 trillion in market value during the session, Bloomberg reported. The rapid reversal followed an initial rally after the U.S. midterm election results: investors had bought stocks as uncertainty eased and oil prices fell, before reassessing what Democratic control of Congress might mean for data center expansion.

Vanda Research said retail investors’ net selling ranked behind only two sessions during the March 2020 pandemic shock. Strategist Viraj Patel described retail investors and systematic strategies as active sellers while institutional buyers stepped back. The Nasdaq 100 recorded its largest decline since March 2020, with stocks tied to artificial-intelligence infrastructure among the hardest hit.

Selling pressure could grow if markets fall further. Nomura strategist Charlie McElligott estimated that options dealers’ negative gamma exposure could prompt about $7 billion in additional selling for each further 1% market decline. The estimate describes potential hedging activity, not sales confirmed as completed. Volatility-control funds faced an estimated $61 billion reduction in stock exposure, while leveraged ETFs were estimated to face $47 billion in stock sales through rebalancing. Vanda put commodity trading advisers’ sales of S&P 500 and Nasdaq futures at about $13 billion. These estimates cover different strategies and instruments and are not a single total of completed sales.

Goldman Sachs’ prime brokerage desk estimated fundamental long-short funds lost about 1.3% on Thursday; technology-focused funds lost more than 4%. Baskets tied to storage, optical networking, data centers and AI semiconductors fell between 12% and 15%. The VIX rose from 16.6 near the opening to almost 28 at the close.

Crypto assets also fell. A Nov. 5 report cited Bitcoin at $75,954, down 5.8%, Ethereum at $2,251, down 7.5%, and Solana at $89.16, down 7.9%. CoinGlass data showed 210,326 traders liquidated in the preceding 24 hours; long positions made up 88.2% of liquidations.