Global Hedge Funds Suffered One of Their Largest Declines Since COVID on Thursday
Bloomberg10/23/2026 Global hedge funds suffered one of their broadest declines since the Covid pandemic following the stock market selloff on Thursday, according to Goldman Sachs Group Inc.’s prime brokerage desk.“For the first time since Covid, all three broad equity strategies fell more than 1% on the same day,” the firm said in a note to clients. Global fundamental long/short managers were down 1.4% at the market close on Thursday, their worst day since July 16, with telecommunications, media and technology-focused funds falling by an average of 2.7%, according to the note. Global systematic long/short managers were hit by their third-worst day since December 2023, dropping 1.3%. Even multistrategy platforms — the pod shops whose broad mix of portfolio managers are designed to protect against firm-wide drawdowns — slid 1.9% for their second-worst day since the April 2025 tariff selloff.Tech stocks in the US were sold heavily on Thursday on mounting concerns over whether massive spending on artificial intelligence will bear fruit. The Nasdaq 100 Index slid 2.9%, the most since June, as fears over oil-induced inflation added to the woes. Even bearish positions aren’t necessarily paying off during a volatile earnings season. “Based on estimates from our prime book, more than two-thirds of hedge funds finished down on the day as concentrated shorts were squeezed further in the second half of the session,” the prime brokerage said.Asia fundamental long/short managers also lost money, with month-to-date declines at 9.3%. Even so, their hedge fund returns remain broadly positive so far this year at 14.2%, according to the note.The selloff was the latest chapter in a wild ride for AI stocks this year, as rallies in shares like SK Hynix Inc. and Micron Technology Inc.have been punctuated by painful declines. In July, a rout in technology shares pushed hedge fund Situational Awareness to the brink, raising fears that the AI bull run was losing steam.
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U.S. stocks edged modestly higher pre-market Friday (SPX +0.1%, NDX +0.4%) as tech partially recovered from Thursday’s AI-spending rout, the Nasdaq’s worst day since June. Brent crude rose 0.9% to $114/bbl and the 10-year Treasury yield ticked up to 4.97%. S&P 2026 EPS estimates of $368 imply a 20.8x P/E and 4.8% earnings yield—below Treasuries, an inversion last sustained in the late-1990s. I expect treasury yields to retreat as the Iran war ends. I remain cautious on Tesla (220x 2026 P/E, PEG 5x) amid negative revisions, the continued commoditization of autonomy, and its stretched valuation.
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Investors are on pace to pour a record $1.3 trillion into global stock funds in 2026, the biggest annual intake ever, per BofA
That would smash the previous record set in 2021, which came in under $1 trillion, based on EPFR fund flow data in BofA's latest Flow ShowUS equity funds are on a record $636 billion pace, and tech funds are on track for a record $196 billionIn the week through Oct 14 alone, $64.5 billion flowed into stock funds while $53.1 billion left cash fundsNow that money is getting tested. The Nasdaq 100 fell 2.9% on Thursday, its worst day since June 23, and $SOXL dropped 20.5%South Korea's KOSPI is down another 2.6% early FridayRecord inflows mean a lot of fresh money bought in near the highs. Even BofA's Michael Hartnett says he's leaning risk-off for the next 3-4 weeks while the cash keeps pouring in, and days like today show how fast crowded trades can unwindSource: StockMarket.News
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Iran just threatened to strike data centers, AI facilities and undersea internet cables across the Gulf
Mohsen Rezaei, secretary of Iran's Supreme National Security Council, said oil facilities, cables, data centers and AI sites in as many as seven Gulf countries could be hit if the US and Israel attack again, per The GuardianHe told Iran's state-run Press TV that more than $2 trillion of US-linked tech infrastructure in the region could be at risk, per Al Arabiya"We have not yet included these assets among our targets. But if war breaks out, many of these cables, data centers, artificial intelligence facilities, and numerous other sites will be destroyed," Rezaei saidUS media report a target list for a new joint US-Israel strike has been drawn up for after the November 3 midterms, per The GuardianBrent crude is up 3.3% to about $113 a barrel today and the Nasdaq 100 is down 3.5%, per Yahoo Finance dataUS tech giants have spent the past year pitching the Gulf as the next AI hub, built on cheap power and sovereign money. Tehran is now openly naming that buildout as a target, which adds a war-risk premium to an AI trade the market is already questioningSource: StockMarket.News
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Americans now hold a record 48.2% of their financial assets in stocks
That is the highest share in Federal Reserve data going back to 1945, per the Fed's latest Z.1 Financial Accounts for the second quarter of 2026The dot-com peak was 38.7% in early 2000. The 2007 peak before the financial crisis was 33.5%Households held $74.0 trillion in stocks, directly and through funds and retirement accounts, out of $153.5 trillion in total financial assetsThe share jumped from 44.7% in the first quarter, and household net worth hit a record $195.9 trillionThat snapshot is from the end of June. Today the S&P 500 fell 1.2% and the Nasdaq 100 dropped 2.9%, its worst day since June 23Retail ownership is a big reason dips keep getting bought so fast. But with nearly half of household savings riding on equities, a real drawdown now hits consumer spending harder than it did in 2000 or 2008. The next Fed update lands Dec 10Source: StockMarket.News
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$SOXL just crashed 20.5% in a single day, one week after traders poured a record $3.8 billion into it
The 3x leveraged semiconductor ETF closed at $82.11 today, its worst day since June 23, per Yahoo Finance dataThe record weekly inflow came during the week of Oct 16, as buyers piled in while the fund was already falling, per Seeking Alpha$SOXL is now down about 73% from its June 22 high of $300.77Chips led the whole selloff. The Philadelphia Semiconductor Index fell 6.7%, $AMD(AMD.US) dropped 8.1%, $Micron Tech(MU.US) 6.3% and $NVIDIA(NVDA.US) 4.4%The Nasdaq 100 lost 2.9% for its worst day since June 23, while the Dow finished slightly green and $Apple(AAPL.US) closed at a record highLeverage cuts both ways. Getting back to the June high would now take a 266% gain, and anyone who bought the dip last week with 3x exposure is already deep underwaterSource: StockMarket.News
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U.S. stocks fell Thursday pre-mkt (SPX -1.1%, NDX -1.9%) on worries that heavy data-center and AI spending will take longer to pay off, raising valuation and concerns about an AI bubble. Brent crude rose to $112/bbl; the 10-year yield dropped 5.4 bp to 5.06% on safe-haven demand. Bitcoin, gold, and silver also declined. Tech shares dropped despite solid $Meta Platforms(META.US) and $Meta Platforms(META.US) results, with Tesla -5.3% after a hype-heavy call and a routine year-end Capex guidance cut; stocks of tech peers followed suit. S&P 2026 EPS estimates of $367 imply a 20.9x P/E and 4.8% yield, inverted versus Treasuries—echoing late-1990s dot-com conditions. 10yr treasury yields are expected to ease by year-end as the Iran conflict ends, restoring a normal equity risk premium. We remain cautious on $Tesla(TSLA.US) given its extended 2026 P/E of 230x vs +45% long-term EPS growth, negative earnings revisions, and continuing commoditization of autonomy.
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The Nasdaq 100 just posted its best day since September 21, one week after it lost 5.5%
The tech heavy index closed up 1.17% Monday. The Nasdaq rose 1.1% to 26,430.89 and the S&P 500 gained 0.4% to 7,690.73, while the Dow slipped 0.1% to 51,966.03$Amazon(AMZN.US) led the Magnificent 7 with a 5% jump, its best day since July 31, adding roughly $130 billion in market value. Morgan Stanley said AWS growth could hit 47% in 2027, and $Amazon(AMZN.US) is funding a 960 MW nuclear project in Indiana$Tesla(TSLA.US) rose 3.8%, $NVIDIA(NVDA.US) 1.4%, $Alphabet(GOOGL.US) 1.1% and $Microsoft(MSFT.US) 0.8%. $Apple(AAPL.US) and $Meta Platforms(META.US) were the only Mag 7 names in the redChips bounced after last week's rout, with $SOXX up 1.7% and $Broadcom(AVGO.US) up 1.8%Not everything held. $Coreweave(CRWV.US) was up as much as 7.3% early and closed down 0.4%The 10 year Treasury yield rose about 4 bps to 5.14%, WTI crude fell 3% to about $98 and the VIX dropped 8% to 18.4A relief rally led by a few megacaps isn't an all clear. The Dow finished red, $Coreweave(CRWV.US) gave back its whole bounce and the 10 year is still above 5%, so the real test is the first big AI earnings reports and whether all that spending is finally paying offSource: StockMarket.News
