“Our phones are exploding”: Goldman Sachs dissects the historic Wall Street crash By Investing.com

Investing.com – Wall Street witnessed a massive crash on Thursday as chipmakers and AI-related infrastructure stocks suffered what Goldman Sachs’ trading desk called a “spectacular” reversal after yesterday’s post-election rebound.

“Yesterday was one of our busiest days of the year at the stock trading desk. Today was the opposite,” the bank’s traders said.

Tech stocks led a sharp selloff on Thursday, crashing 5.5% and plunging into official correction territory. The benchmark index also suffered heavy losses, sliding 4.3%, with both indexes posting their worst intraday performances since April 4, 2025. The blue-chip index fell 3.4%, erasing all gains from Wednesday’s rally.

So what really happened on Thursday? According to Goldman Sachs, long-only managers had reduced risk aggressively before the election, then were caught off guard by Wednesday’s rebound and re-entered the market.

Hedge funds that bought back shares on Wednesday moved just as quickly to sell them back on Thursday, with Goldman pointing out that they quickly sold back some of the stocks they bought back yesterday, particularly hyperscalers.

In essence, what looked like post-election relief now seems very misplaced, traders said.

Goldman noted that the selloff in tech stocks was about five times the implied move factored into the day on Wednesday, meaning options markets had priced during a relatively calm session and were blindsided by the ferocity of the reversal. The bureau identified the sale of macro products, not liquidations of single securities, as the main culprit.

The bureau also signaled a fundamental shift in how investors view the AI ​​business: The debate has shifted away from long-term demand for artificial intelligence and toward the pace and cost of deployment. Rising financing costs, growing political pressure around data centers and regulatory fears after the election are weighing on sentiment.

“Flows were completely panicked this morning,” the bureau wrote, while noting that conditions stabilized somewhat once relative value volatility funds began exploiting the dislocated bias.

On what will happen after such a brutal day, the office wrote. “Many opportunities are starting to emerge, but it is difficult to know when the selling pressure will ease. In the meantime, stocks can trade well below what their fundamentals warrant. And when the pressure eases, the rebounds can be violent.”

As a result, the first tentative signs of dip buying appeared late in the session, with Goldman confirming investor interest in buying the dip in stocks such as , , , and .