Key facts
- Major hedge fund strategies posted their worst day since the COVID-era market rout on October 22.
- Meta Platforms slumped 7% on October 22, its largest drop since July.
- Nvidia tumbled 4% on October 22.
- The Nasdaq Composite lost 2.6% on October 22, its largest decline since June 5.
Global hedge funds faced a significant downturn on October 22, marking their worst trading day since the COVID-19 pandemic. A renewed selloff in major technology stocks, fueled by concerns over massive artificial intelligence buildout spending, impacted various strategies, including fundamental equity long-short, systematic, and multi-strategy funds. Goldman Sachs' prime brokerage noted that all three major strategies tracked lost over 1% on the day. The selloff was partly triggered by Meta Platforms announcing it would issue a new class of shares to raise funds, causing its stock to drop 7%. Nvidia also fell 4%, contributing to the Nasdaq Composite's 2.6% decline. Asian markets, including South Korea and China, also experienced pressure from higher oil prices and AI spending fears. Market participants reported deleveraging among hedge funds as losses in AI-linked trades prompted investors to cut exposure.