Sou Hu Cai Jing·2025-10-11 10:30Core Viewpoint - The recent significant decline in the U.S. stock market is attributed to a combination of political uncertainty, weak economic data, and previous overvaluation, leading to a massive sell-off across various sectors, particularly technology and cryptocurrencies [1][3][7]. Market Performance - On October 11, the Nasdaq dropped 3.56%, marking its largest single-day decline since April, while the S&P 500 fell 2.71% and the Dow Jones decreased by 1.9%, resulting in a loss of $6 trillion in market value [1]. - European markets followed suit with a similar downward trend, and WTI crude oil plummeted over 4%, while Bitcoin experienced a drop exceeding 13%, falling below $110,000 [1]. Political and Economic Factors - The U.S. government shutdown entered its tenth day, with the Senate failing to pass funding proposals, creating heightened market anxiety [3]. - President Trump's announcement of permanent layoffs for federal employees and potential increases in import tariffs further exacerbated investor fears regarding deteriorating global trade relations and corporate earnings [3]. - The preliminary consumer confidence index from the University of Michigan for October was reported at 55, the lowest since May, with over 60% of respondents anticipating a rise in unemployment next year [3]. Stock Market Reactions - The technology sector was particularly hard hit, with significant declines in major stocks: TSMC ADR down over 6%, Tesla and Broadcom down over 5%, and Nvidia and Amazon down over 4% [4]. - Chinese stocks also suffered, with the Nasdaq Golden Dragon China Index dropping over 6%, and notable declines in companies like Futu Holdings and NIO [4]. Investor Sentiment - Many investors expressed frustration over recent losses, particularly those who had recently increased their positions in technology stocks [5]. - Some market participants remained calm, suggesting that the previous rally driven by the Federal Reserve's policies was unsustainable and that true performance metrics should be the focus [5][6]. Future Outlook - Analysts suggest that the current downturn reflects both policy impacts and an over-optimistic investor sentiment, with the market lacking clear economic data for guidance [6]. - The upcoming earnings reports from major banks like Citigroup and JPMorgan are anticipated to provide critical insights into market confidence [6]. - Despite the downturn, certain sectors, such as rare earth materials, showed resilience, indicating a shift of funds towards more stable investments [6].