Wall Street appeared ready to recover from October’s $2 trillion technology stock wipeout on Monday. Within hours, roughly $700 billion in fresh market gains had evaporated.
The S&P 500 surged as much as 1.1% in morning trading before closing down 0.5%. The Nasdaq Composite fell 1.1%, extending last week’s brutal AI stock selloff.
The reversal came shortly after CNBC host Jim Cramer posted on X:
“Here we go: biggest tech takeout.”
He was referring to Marvell’s $115 billion acquisition of Lumentum. But the timing quickly revived jokes about Cramer’s famously mixed market predictions.
Why Did the Stock Market Rally Suddenly Collapse?
The morning optimism came from the Middle East.
Oil prices dropped to $104 as possible US-Iran peace talks raised hopes of cheaper energy and easing inflation.
Stocks initially jumped. The Nasdaq 100 gained around 1.3%, while the Dow climbed more than 1%.
But investors soon returned to the same concern that erased more than $2 trillion from the Nasdaq 100 during October: How much longer can Big Tech keep spending billions on AI without delivering sufficient returns?
Oracle plunged nearly 9% after announcing plans to raise $20 billion through stock and bond sales to fund its AI expansion. Marvell lost almost 13%.
White House Says AI Has Plenty of Money
Meanwhile, White House economic adviser Kevin Hassett dismissed fears of an AI financing crisis.
“There’s so much cash in the ecosystem that I think that people should be reassured,” Hassett said.
Interestingly, nearly 70% of S&P 500 companies finished higher. The weakness remained concentrated in major technology stocks.
As for Cramer’s supposed curse, the Inverse Cramer ETF, designed to bet against his recommendations, lost 15% before closing in 2024.
Investors now face Tuesday’s US midterm elections and Friday’s jobs report, with confidence in the AI trade already shaken.
