Why did the stock market plummet today?

According to The Kobeissi Letter, the sharp drop in the stock market on Thursday is more related to concerns about artificial intelligence regulation and leverage factors than to the results of the mid-term elections themselves.

This research institution stated that the outcome of the Democratic Party's sweeping victory had already been largely factored into market pricing earlier on. Therefore, what investors should be asking is: what changes have actually occurred over the past 24 hours?

The answer given by this institution is that the market is increasingly concerned that Democratic lawmakers may push for strict restrictions on advanced artificial intelligence, with some even calling for a ban on artificial superintelligence.

Kobeissi indicates that a complete ban will not occur, as that would hand over the leading position in the global AI competition to China.

The institution believes that this round of selling is more driven by technical factors rather than fundamental reasons, and it is the result of a sudden change in sentiment combined with high leverage, which may force large institutions to sell.

Founder Adam Kobeissi stated that the S&P 500 index has still risen by 9% this year, and has gained 85% since the AI craze began, urging investors to remain calm.

Author: Anjali Belgaumkar