Wall Street Jitters as Weekend AI Bet Losses Reach $52 Million

On Friday, CNN's Fear & Greed Index dropped to 18, placing it firmly in "Extreme Fear" territory. That came after the Nasdaq lost 4.5% over the week. The reading arrives just a day before the 39th anniversary of Black Monday, and talk of a crash is growing across social media.

With Wall Street closed on Saturday, traders saw nearly $52 million wiped out in just 10 minutes on leveraged bets tied to AI and chip stocks.

What Is Driving AI Stocks to Pull Wall Street Into Extreme Fear?

The index uses seven market signals to rate investor sentiment from 0 to 100, with each signal compared against its own recent history. All seven carry equal weight. The components are:

• Market momentum: compares the S&P 500's current level to its average over the previous 125 trading sessions.
• Stock price strength: tracks the number of NYSE stocks hitting 52-week highs versus 52-week lows.
• Stock price breadth: uses the McClellan Volume Summation Index to measure the share of volume flowing into advancing versus declining stocks.
• Put and call options: measures the five-day average ratio of put options (bets on declines) to call options (bets on gains).
• Market volatility: the VIX, Wall Street's "fear index," set against its 50-day average.
• Safe-haven demand: compares stock performance to Treasury bonds over the latest 20 trading days.
• Junk bond demand: the additional yield demanded by investors to hold riskier corporate bonds over investment-grade alternatives.

The Philadelphia Semiconductor Index dropped 11.4% over the week, its weakest performance since April 2025, per Investing.com. The Dow, however, managed a 0.7% gain.

CoreWeave, a cloud company that leases AI computing capacity, saw its shares fall roughly 25%. The firm's bonds also touched new lows as part of a wider AI debt glut.

Fresh inflation data also reignited expectations that the Federal Reserve could raise interest rates, increasing borrowing costs.

"Hot inflation data suggests interest rates will remain higher for longer," Michael O'Rourke of Jones Trading stated.

The information technology sector accounts for about 39% of the S&P 500, according to CME Group data. That leaves index-fund investors with significant exposure.

Could Black Monday Repeat Itself Without Market Safeguards?

On October 19, 1987, the Dow Jones Industrial Average fell 22.6% in a single session, according to the Federal Reserve. At that time, no circuit breakers were in place.

Now, a drop of 7% or 13% in the S&P 500 triggers a 15-minute trading halt. A 20% decline closes markets for the remainder of the day.

Those circuit breakers do not apply to perpetual futures — contracts on crypto exchanges that track equity prices continuously. When prices decline, exchanges liquidate leveraged positions, and each forced sale can drive prices down further.

Of Saturday's total losses, roughly $38 million came from traders who had wagered on price increases.

Stocks are getting hammered as selling pressure continues on Liquid this weekend, now spreading across memory, storage and AI infrastructure. $WDC and $STX are leading the slide, while $MU and $SNDK are now down more than 3% versus Friday's close. The pressure extends through…

— Liquid (@liquidtrading) October 17, 2026

Are We Seeing a Crash or Just a Pullback?

Over seven days, short sellers earned roughly $32 billion betting against chip stocks, based on S3 Partners data reported by Bloomberg.

"The run up in chips was very aggressive so invariably there was going to be some consolidation or pull back," Dec Mullarkey of SLC Management told Bloomberg.

Mark Newton of Fundstrat has advised investors to buy the technology dip while also diversifying their portfolios.

When markets open on Monday, it will become clear if the weekend selling was driven by genuine pressure or simply thin volumes. The bigger question is whether concerns about AI-related debt will expand beyond a handful of heavily leveraged firms.