Late-night plunge across the board! "AI Super Storm" strikes the US stock market!

“AI Super Storm” Strikes the U.S. Stock Market.

Due to a dual impact of AI (Artificial Intelligence) panic trading and the rekindling of tariff war risks, the U.S. stock market plunged across the board overnight. The Dow Jones Industrial Average dropped over 821 points, the Nasdaq and S&P 500 indices both fell more than 1%. Most large tech stocks in the U.S. stock market closed lower, software stocks faced heavy selling again, and the VIX fear index surged over 10%.

Goldman Sachs’s latest data shows that institutional investors are selling U.S. stocks at the strongest pace in four years and buying downside protection. The one-month options skewness of the S&P 500 has risen to its steepest level in four years, driven by expensive downside put options and cheap upside call options.

All-Index Decline

On the evening of February 23 Beijing time, after the U.S. stock market opened, the three major indices all tumbled. By the close, the Dow fell over 821 points, down 1.66%; the Nasdaq declined 1.13%; and the S&P 500 dropped 1.04%.

Most large tech stocks in the U.S. stock market declined, with Microsoft plunging over 3%, Amazon, Meta, and Tesla dropping more than 2%, and Google down over 1%. Nvidia, which is set to release earnings this week, rose 0.91%, and Apple gained 0.6%.

Analysts pointed out that Monday’s U.S. stock market experienced a “AI shockwave” and a rekindling of tariff war risks, resulting in renewed heavy selling in financial and software stocks.

On the news front, AI startup Anthropic announced the launch of its Claude Code product with new programming features, automating most research and analysis work for the COBOL programming language, raising concerns about IBM’s mainframe business prospects. IBM’s stock price plummeted over 13% on Monday, marking its largest single-day drop in over 25 years, with a total decline of 27% so far in February, the biggest monthly drop in decades.

Other software stocks also suffered heavy losses, with the software ETF IGV falling nearly 5%, continuing to hit a two-year low and likely to record the worst monthly performance since 2008. Among them, Applovin and CrowdStrike dropped over 9%, Oracle fell over 4%, and C3.ai and Palantir declined over 3%.

Additionally, an article titled “The Intelligent Crisis of 2028” spread wildly in the U.S. stock market, further fueling investor fears. The article, based on a “macro study published in June 2028,” speculates on the impact of AI technological advances and the proliferation of intelligent agents on society and the economy.

The article presents a fictional hypothesis: that AI repeatedly surpassing optimistic expectations does not necessarily benefit assets and the economy. Instead, abundant machine intelligence could squeeze labor income and consumption cycles, triggering demand contraction and financial re-pricing driven by a “productivity boom.”

By the close of the U.S. stock market, stocks named in the article generally declined. Notably, delivery platform DoorDash, Blackstone, and American Express fell over 6% and 7%, respectively, while Uber and Visa also dropped.

In response, JonesTrading Chief Market Strategist Michael O’Rourke said, “This is a shocking market reaction. In the face of real negative news, I’ve seen this market show remarkable resilience; but now, a completely fictional piece has directly sent the market into a free fall.”

Regarding tariffs, after most global tariff policies were overturned by the Supreme Court last year, the risk of the U.S. President Trump reigniting a trade war has sharply increased. Trump warned on Monday that any country attempting to “play tricks” with the Supreme Court ruling would face higher tariffs and more severe consequences. Nevertheless, the EU has decided to suspend approval of the U.S.-Europe trade agreement, adding uncertainty to U.S.-EU economic relations.

As a result, international gold and silver prices surged. Spot gold rose 2.38%, COMEX gold futures increased 3.31%, spot silver jumped 3.99%, and COMEX silver futures soared 7.26%.

The market’s next focus will be on the U.S. President’s State of the Union address scheduled for Tuesday evening (early morning of February 25 Beijing time).

Goldman Sachs Issues Sudden Warning

Goldman Sachs data indicates that the U.S. stock market is currently in an abnormal divergence phase of “extreme index calm and individual stock volatility.” Despite the VIX index being low, institutional investors are selling U.S. stocks at the strongest pace in four years and buying downside protection.

Goldman Sachs trader Brian Garrett noted in a recent report that recent institutional activity includes selling, shorting, reducing overall exposure, and net exposure—showing defensive behavior “more like a VIX at 35.” The one-month options skewness of the S&P 500 has risen to its steepest level in four years, driven by expensive downside puts and cheap upside calls.

A Goldman Sachs trading desk source said, “We still haven’t seen demand for S&P 500 call options in the trading floor.”

Data shows that long-term asset managers sold $4 billion net last week and have sold $10 billion so far this month. Hedge funds have been net sellers of U.S. stocks for three of the past four weeks through prime brokers, with 70% of net sales in the technology, media, and telecom sectors. Sector-wise, there is a clear divergence: funds are heavily selling software and internet stocks while buying semiconductors and memory chips.

Garrett pointed out that this is one of the largest monthly selling tendencies by asset managers and pure long-only funds in four years, with other major sell-off months occurring in August 2022 ($18 billion), March 2024 ($14 billion), and March 2025 ($22 billion).

Analysts suggest that the U.S. stock market is approaching a critical test. Global AI leader Nvidia will release earnings after the U.S. market closes on Wednesday, which could serve as a catalyst for a directional breakout in the market.

Dongcai Chart Explanation · Key Insights