Intraday Flash Crash: Nasdaq 100 Loses 1,000 Points in 27 Minutes
On the evening of June 25, U.S. equity markets experienced a sudden and violent selloff with no clear trigger. The Nasdaq 100 index, after opening up 1%, reversed sharply and plunged 1,000 points in just 27 minutes. The S&P 500 similarly dropped, erasing approximately $1 trillion in market capitalization. The abruptness of the move left traders scrambling to understand the cause.
Potential Drivers: Leveraged ETFs, AI Uncertainty, and Crypto Liquidations
Looking at pre-market data, U.S. PCE inflation rose to 4.1%, the highest level since April 2023. At the same time, Apple announced price increases of up to 25% on its Mac and iPad lines due to soaring AI chip costs, sending Apple shares down nearly 6% and wiping out about $220 billion in market value. While these factors contributed to a nervous mood, most market participants considered them insufficient to trigger a crash of this magnitude and speed.
In a note, investment research firm The Kobeissi Letter pointed to the widespread use of high-leverage ETFs, which amplified selling pressure, along with heightened uncertainty around AI stocks and massive liquidations in the cryptocurrency market as key amplifiers of the volatility. The firm stated that the market's structural fragility means elevated volatility is likely to continue in the near term.