Nasdaq 100 enters correction, down 10% on AI and election worries

The Nasdaq 100 closed below 28,000 points on Monday, down 10.4% from its October 6 high, officially entering correction territory amid AI sector concerns and midterm election jitters. Analysts attribute the decline to faltering AI investments, with Microsoft and Alphabet selling off due to heavy spending eroding cash flows, while suppliers suffer from slowing demand. Deutsche Bank also cited emerging expectations of a Democratic midterm victory potentially leading to stricter AI regulation. Fund managers are reducing AI exposure, with Morgan Stanley data showing record gross-flow drawdowns for hedge funds. Investors are also pricing in political gridlock, as President Trump vows to be "Mr. Veto" if Republicans lose control of Congress.