Wall Street loses $5.7 trillion as AI bets unwind

Wall Street experienced a $5.7 trillion market rout this week as concerns over AI valuations, debt, and spending returns triggered a global selloff, compounded by political fears from the Democrats' Congress sweep. The Nasdaq 100 saw a $2.3 trillion wipeout on Thursday, with 57% of its constituents falling at least 20% from highs. Hedge funds, leveraged investors, and retail traders joined the selling, while the Fed's inflation focus and Trump's weakened position limited rescue efforts. Oil price declines on Iran war hopes offer potential inflationary relief, though benefits would take time. Investors had rotated toward defensive sectors before the election, but those failed to withstand the tech collapse. Some managers like Jeff Muhlenkamp exited AI holdings early, while analysts suggest forced selling may be nearing exhaustion.