US Stock Market Faces Further Volatility as Investors Assess Tech Selloff

The US stock market is showing early signs of stabilisation following a sharp selloff in technology and artificial intelligence (AI)-related stocks, but analysts warn that it is too soon to declare the correction over. The Nasdaq-100 index, which reached a record high in early October, has fallen nearly 10% from its recent peak. Investor concerns over rising AI infrastructure spending, uncertain returns and slowing capital expenditure have contributed to the decline. The latest pressure came after the US midterm elections revived economic slowdown concerns, triggering further losses in AI stocks.

Market analysts are monitoring four key indicators to assess whether the selloff has reached a turning point: technology stock positioning, market correlation, options demand and technical trends. Data from Deutsche Bank suggests investors have significantly reduced their exposure to technology stocks, with positioning falling below levels recorded during the April 2025 market downturn. Meanwhile, expectations of stock market correlation have increased only modestly, suggesting investors view the recent decline as largely sector-specific rather than a sign of a broader economic slowdown. The reduced demand for call options on AI stocks also indicates that some speculative activity has eased, although options market signals remain mixed.

Despite these encouraging developments, technical analysts remain cautious about the market’s near-term direction. Fundstrat Global Advisors strategist Mark Newton noted that the recent rebound in technology stocks has struggled to break above key downward trends, indicating that volatility could continue for several more weeks. The absence of clear technical signals confirming a market bottom has added to investor uncertainty. With the upcoming Anthropic initial public offering expected to test Wall Street’s confidence in the AI sector, investors are closely watching whether the recent correction marks a temporary setback or the beginning of a deeper market adjustment.

Pic Courtesy: google/ images are subject to copyright