#美股史诗级抛售 #每周来晒 #Gate股票畅聊季 How should we view the sharp drop in U.S. stocks?

On November 5, U.S. time, the S&P 500, Nasdaq, and Dow Jones fell 4.4%, 5.5%, and 3.4%, respectively, each posting its biggest single-day decline since the tariff shock in April 2025. AI-linked stocks led the losses: the Nasdaq 100 fell more than 6%, and the Philadelphia Semiconductor Index plunged about 12%, both marking their biggest single-day declines since March 2020.
How should we view the sharp drop in U.S. stocks and what comes next? Here are some brief thoughts:

I. Characteristics of this sell-off: sharp losses, broad declines, signs of panic and forced selling
1) The losses were extremely sharp. The Philadelphia Semiconductor Index and Nasdaq 100 both saw single-day declines comparable to those during the extreme circumstances of the COVID-19 outbreak in March 2020.
2) The declines were extremely broad. Unlike previous periods of cooling AI enthusiasm, when defensive sectors and small-cap stocks rose, all 11 U.S. stock market sectors fell yesterday. Even defensive consumer staples and utilities were down, leaving “nowhere to hide”—a possible sign of forced selling.
3) Volatility and panic are rising. The VIX rose to 28 (above 25 is considered dangerous, surpassed only by the Iran situation at the start of the year). The gap between spot VIX and three-month futures widened to its largest since April 2025. This is often a direct sign of market panic, and even a harbinger of further pressure.

II. The cause of this sell-off: AI regulation fears amplified by sentiment
The immediate trigger for this decline was once again market fears that Democrats could step up AI regulation and halt data center construction after winning the midterm elections.
On Thursday, newly elected Democratic Texas Governor Gina Hinojosa told the media that “Texas will enact laws to protect citizens from the impact of data centers”; at the federal level, Sanders again called for a nationwide pause on data center construction. Policy proposals at the state and federal levels have gained traction together, heightening concerns about the pace of AI infrastructure development and the sustainability of investment.
Markets have swung back and forth over the past two days: futures plunged before the open on election day on the 3rd, then rebounded to recover losses as global markets surged, before plunging today. As we noted in our analysis of the asset implications of a Democratic “sweep,” many Democratic policy issues could have completely opposite effects on the same asset. With it unclear which proposals could advance first, or whether they could advance at all, global markets have “chosen” a direction to trade. For example, there are plenty of explanations for both sharp gains and sharp losses.
 In essence, the impact of the midterm elections on asset pricing hinges on whether the market’s dominant force is checks and balances aimed at “correcting course” (inflation, the Iran situation, the Fed, tariffs), or disruption driven by “opposition for opposition’s sake” (AI, fiscal policy). The day before yesterday, markets traded the former; yesterday, the latter. But we can doubt that the market knows which direction will take precedence. For example, concerns about AI regulation warrant attention when it comes to pressure at the local level, but Democrats do not currently have enough support in the Senate to pass federal AI regulation legislation.

III. How should we view the market at this level?
Focus on liquidity in the short term; stabilization will require capitulation and catalysts; markets are focused on gold and the Hang Seng Tech Index
In light of the characteristics of the sell-off discussed above, whatever the cause or catalyst, and whether subsequent concerns materialize or not, short-term price action is no longer being driven by fundamentals.

► Whether panic and forced selling will lead to further liquidations and liquidity risks may take time to become clear. For example, we have already seen some hedge funds announce that they are closing out their positions.
Leverage in U.S. stocks had previously hit a record high. FINRA data showed implied leverage based on margin balances rising to a record 3.4, while the CBOE options open-interest put/call ratio also rose to 1.33, its highest since late 2018. This means the market is more sensitive to changes in prices and volatility. If a rapid drop triggers margin calls, forced deleveraging, and adjustments to derivatives hedges, selling pressure could spread from AI stocks to other holdings, creating a feedback loop between falling prices and deleveraging.
For now, the pressure is limited to the stock market. If we see both Treasury yields and the dollar rising, that would be a greater cause for concern, as it would mean investors are selling even safe assets such as U.S. Treasuries to meet funding shortfalls, with liquidity risks surging sharply.
►Market stabilization will require natural capitulation or a powerful catalyst to reverse pessimistic expectations. Either way, patience will be needed.
AI is currently in a lull, with the key issue being a lack of new narratives and catalysts around demand and models. This also amplifies concerns about credit risks and regulatory pressure. Meanwhile, heavy capital spending continues to squeeze cloud providers’ free cash flow, deepening concerns about the pace of AI revenue realization and investment returns.
The first half of next year will be a key testing period. Markets need to see a breakthrough in actual business results, similar to Anthropic’s better-than-expected performance in the first quarter this year, to bolster confidence. Otherwise, as market patience runs out, the outlook for capital spending and returns in 2028 will dim further, and the market’s main trading theme may shift to recession trades.
Technically, the Nasdaq has already fallen below its 200-day moving average and is now at the key 60-week moving average. If it cannot hold here, it will test the next support level.
►Looking at other areas, observations of market performance over the past two days during the midterm elections suggest that the path of least resistance in trading is gradually converging on the Hang Seng Tech Index and gold.
1) The Hang Seng Tech Index has limited AI exposure, so there is less need to worry about AI risks. Expectations that declining geopolitical risks will bring down oil prices and inflation could also reduce pressure for rate hikes.
2) Gold can benefit from rising political and geopolitical risks, as well as from lower oil prices and inflation easing pressure for rate hikes, and from a weaker dollar and lower Treasury yields.
However, the Hang Seng Tech Index’s problems were always internal rather than external. Its “advantages” are its low valuations and limited AI exposure, but a rebound driven solely by an improving external environment and portfolio reallocations faces resistance from fundamental pressures and renewed geopolitical risks. During the rebound over the past two days, heavy net selling by Southbound funds and rising short-selling volumes in Hong Kong stocks both point to growing market divisions (How will the market bottom?).
By comparison, gold faces less resistance, with several factors still working in its favor.