Why US stock market lost $2.7 trillion in hours
21 Nov 2025

The US stock market witnessed a major crash on Thursday, wiping out nearly $2.7 trillion in value within hours.

The day's trading began on a positive note with NVIDIA's stellar earnings report, which sent its shares up as much as 5% and boosted the broader technology sector.

However, this optimism was short-lived as NVIDIA's stock reversed its gains by mid-session, closing 3.2% lower and dragging semiconductor shares down with it.

Market volatility and economic data impact
Market fluctuations

The market witnessed extreme volatility on Thursday, with both the Nasdaq and Dow experiencing intraday swings of over 1,000 points.

The Nasdaq's 4.9-percentage-point difference between its high and low was its biggest swing since April 9, during tariff-related market turmoil earlier this year.

Meanwhile, fresh economic data painted a mixed picture of the US labor market: unemployment rose in September even as employers added more jobs than economists had forecasted.

Federal Reserve's stance and market reaction
Fed response

The contradictory economic data has heightened uncertainty over the Federal Reserve's next moves, with investors closely watching for signs of a potential interest rate cut in December.

The Cboe Volatility Index (VIX) spiked to its highest since April 24, indicating a spike in fear among institutional investors.

Major funds rushed to defensive positioning by selling high-valuation tech stocks already under scrutiny due to concerns over excessive AI-related spending and stretched market valuations.

Fed governor's warning and market response
Market caution

Fed Governor Lisa Cook warned that valuations across multiple markets—equities, corporate bonds, housing, and leveraged loans—were historically elevated and could be vulnerable to a significant pullback.

Her comments reinforced the belief that the market may have run too far, too fast.

By day's end, nearly every major sector was deep in the red with technology stocks leading the decline.

Market breadth and trading volumes
Market dynamics

The market breadth was overwhelmingly negative on Thursday.

On the NYSE, declining stocks outnumbered advancing ones by more than three to one.

On the Nasdaq, over 3,500 stocks fell against just 1,168 that rose.

Trading volumes soared to nearly 21.5 billion shares, well above the recent 20-day average, highlighting the intensity of the selloff and indicating a shift in investor sentiment.