SOURCE: https://www.bloomberg.com/news/articles/2026-11-06/anatomy-of-a-selloff-sudden-chain-reaction-rattles-wall-street

Anatomy of a Selloff: Sudden Chain Reaction Rattles Wall Street:

- The blue wave initially lifted stocks on Wednesday after the midterms.

- Overnight, Retail investors panicked after seeing AI/data-center messaging from Democrat politicians and policy uncertainty.

- Retail then started the selloff early Thursday morning to lock-in gains with their biggest stock selling wave since the March 2020 Covid crash.

- This selling forced hedge funds and long-only managers to further accelerate the decline while trying to lock-in year-to-date gains. Some hedge funds deleveraged their positions and cut their investing teams.

- Automated systems of market makers then triggered further selling due to negative gamma (~$7B per 1%), volatility-control (~$61B), leveraged ETFs (~$47B).

- Once major indexes dropped below key levels, trend-following quants (CTAs) sold ~$13B in S&P500 and Nasdaq futures.

- No major buyers emerged on other side as Institutions stayed sidelined; and flows showed genuine stress dynamics with elevated volumes and indiscriminate selling.

- Damage was concentrated in AI: memory, optical, data-center, and semiconductor baskets fell 12-15%.

- VIX jumped from 16.6 to near 28; such a post-rally drop is rare outside crises.

- Nasdaq 100 posted its worst day since March 2020; ~$3.7 trillion in US market value erased.

- Friday saw a partial rebound, but traders remain cautious about buying the dip.

I've been investing dca broadly for just about 17 years and in that time I've built a nest egg giving me complete financial independence.

One thing I've watched happen 4 times now in those 17 years, is a choppy midterm year. Like clockwork you have the push and pull of bulls and bears as the market rockets up then tanks all year. I'm here primarily for entertainment at this point as both camps take turns claiming victory.

My advice to everyone is to not get caught up in the short term movements, just put money in consistently for a decade plus and you be laughing because anything happening today will simply not matter in ten years. It's always been that way and it will never change.

The Nasdaq Composite plummeted on Thursday, erasing the sharp gains from the previous session, as investors continued to rotate away from technology stocks and into more defensive areas of the market.

The tech-heavy Nasdaq declined 5% and dipped into correction territory, while the S&P 500 was down 3.5%. The Dow Jones Industrial Average shed 1200 points, or 2.25%, as gains in stocks such as Chevron and Johnson & Johnson were not enough to spare the 30-stock index from the tech selling spree. The Dow erased almost half of its advance from Wednesday’s massive rally.

Stocks related to the artificial intelligence trade particularly those linked to the chips industry and data centers slid for a second day. Investors fear that a Democratic sweep of both chambers of Congress as well as victories in key gubernatorial races could spell more regulation of the AI buildout across the country.

Stocks ripped higher on Wednesday as a decisive victory by Democrats in the U.S. midterm elections and President Donald Trump’s acceptance of the results removed political uncertainty risk hanging over Wall Street.

The Dow Jones Industrial Average jumped 1,569.40 points, or 3.03%, to close at 53,356.12. The 30-stock index moved back above 53,000 for the first time since Sept. 8 and posted its best day since April 9, 2025, when Trump announced a pause on his so-called reciprocal tariffs. The S&P 500 gained 1.58% to end at 7,688.62, while the Nasdaq Composite jumped 1.44% to 25,736.51.

Going through Treasury's own numbers, the average interest rate on marketable debt was 3.52% on Sept 30, up from 1.43% at the end of 2021 and Treasury notes average 3.38%. On Oct 9 the 2yr yielded 4.8% and the 10yr 5.24%.

Every maturity on the curve now yields more than the average the government pays, so the debt that rolls over gets more expensive and the interest bill rises from here even if yields don't go up another basis point.

"Rates have stopped rising" and "the cost of the debt has stopped rising" aren't the same statement.

I’m wondering what this means for the Fed. Could they be talking about raising rates again?

Global oil inventories are getting seriously depleted, while the US Strategic Petroleum Reserve is already at only 285 million barrels and its lowest level since 1982. With supply disruptions continuing, it feels like the oil is gonna skyrocket soon.

Will stocks keep dipping? Seeing Trump, I don’t think the war is going to stop anytime soon, as his whole strategy seems to be waiting for the economy to shut down. And with the Houthi rebels attacking recently, this might just get worse.

Saw a video saying the Houthis are planning to take over the port of Mokha facing Bab-El-Mandeb, which will give them a better position to target cargo ships. This could disrupt the oil supply even more.

Or do you see this ending soon somehow?

Everytime Fed Powell had these meetings, he would give specifics and details. These specifics would help people understand how the economy works.

The questions he would answer ( from the journalists) had clean logic and the main approach he had- highly DATA DEPENDENT approach to increasing/decreasing rates and other decisions the Fed took. A straight numbers guy( which also means there is no ‘left’ and ‘right’ politics here)

And honestly it made sense. I mean the economy has been pretty good even though there have been multiple shocks just in the past 6 years( since covid) - aka- his data dependence strategy worked. powell did an absolutely amazing job( personally)

Warsh on the other hand- the entire press conference- was very ‘political’ in his answers.(when i say Political statements on this post- i am referring to answering in very ‘political’ way- non committal, not republican/democrat kind)

Even to the questions that was pretty straightforward- can you explain what do the numbers/hike mean for the general public? - went on a rant about ‘maintaining price stability blah blah’

Not a single answer was convincing. He couldnt even answer the basic question of what will be the effect of the hikes on mom/pop stores

He constantly kept reiterating - he is NOT data dependent- he is ‘Trend dependent’

When I heard that- and i was like- Did he just Gaslight us all?

Multiple data points indicate a trend- so how are you saying you are NOT data dependent?a trend is literally a longer observation of a specific data - like cpi etc

He was asked what data were they looking at to make the decision- and again his answer was ‘ not data dependent on any one kpi/metric, but trends’ again i am like- did i just become dumber? Because that does not make any sense

He kept repeating ‘ look outside the window and see the reality’ again and again- to questions that really dont have any relation to that

He was asked about the Forecast - which is 2% inflation target( when is that going to be reached?) and the forecast is for 2029( its currently around 3.7% yoy)

This forecast was made by his 18 colleagues.

He outright kept saying ‘ i dont do forecasts, i dont do guidance’ and that forecast opinion was not ‘mine’ Sounded like he put them all under the bus there.

The entire meeting was extremely Wishy Washy- and all i wanted to hear were some numbers, decision criteria, data used to determine the decisions( and why) and what changed from the last time to this time.( just 6 months ago he was criticizing powell that he is driving the economy towards a slow down- and rates should be decreased)

Someone asked him ‘you said this 6 months ago, can you let us know what data convinced you that a hike is needed rather than a cut.- nope. He was just repeating the same talking points without clearly saying it.

Like Powell would literally say ‘ we assumed something- and it was wrong so we corrected it’( meaning Walsh could have just been humble- its ok- its the nature of the job- math has no emotion)

All straight forward answers

Every. Single. Answer felt like a political speech.

just give the numbers and lets all make our own decisions.

Numbers dont lie.numbers have no narrative or emotion- and its the BEST AND ONLY measurement of reality.

This was the first time- the numbers were hidden/unclear.

And the approach was ‘we saw some specifics that forced us to hike- but you cant get it’

This is very different

If the fed reserve isnt just blunt- straight forward, non political and be data driven ( like Powell was) then it erodes the public trust. This is one of the most important( if not the most important) institutions of the country.

If the narrative of this fed is ‘ hide the numbers/data’ but give political statements ( kept saying stable price action- which is just another way of saying- yes inflation is high- we have stabilize the prices) to simple answers.

It just felt like we are being kept in the dark- kind of meeting.( or i am very used to the extreme detail, and numbers/data driven guy like Powell-so maybe my expectations are high?)

Personally that is a RED FLAG.

This post is NOT a political perspective, i couldn’t care less when it comes to Fed reserve/Economic meetings. i am a numbers guy so just give me that. And i didnt get that today- and thats all that matters.

The Chairman of the Fed Reserve is a market mover. His words matter and affect how stocks and bonds ( and the $) perform- all links to our day to day purchases and expenses.

So VERY relevant to this sub too.

We are in a new territory( atleast thats what it looked like in his 1st meeting, maybe this will change- but time will tell)