How bad is the US stock market? Hedge funds are already losing so much they're laying off staff overnight.

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Several major funds experienced significant drawdowns or even turned negative for the year, subsequently initiating layoffs, returning capital, and adjusting their strategies.

The first week of November 2026 will surely go down in the annals of U.S. capital markets history. On one side, Democrats achieved a historic breakthrough in key states in the U.S. midterm elections; the very next day, U.S. stocks suffered their worst single-day decline since March 2020.

The S&P 500 fell 4.36%, with constituent stocks losing approximately $2.9 trillion in market value in a single day. The Nasdaq Composite dropped 5.52%, pulling back 11% from its record high set in October and entering technical correction territory. The Nasdaq 100 plunged 6.4%, marking its largest single-day decline since March 2020, with approximately $2.3 trillion in market value wiped out in a single day. The Philadelphia Semiconductor Index plummeted 12%, its biggest drop since 2020. The Dow Jones Industrial Average fell 3.44%.

In fact, the market didn't start falling on November 5 — it began declining in October when expectations for Republicans in the midterm elections were not high.

In October, Goldman Sachs data showed that short bets against individual stocks rose to a near five-year high; Morgan Stanley data showed that stock-picking funds made their largest active de-risking in over a decade in October, with net market exposure down about 9% since June. By the end of October, more than 40% of funds had their year-to-date returns wiped out or turned negative.

Global hedge funds lost an average of about 3% in October. That doesn't sound alarming, but that's the average. Broken down, large multi-strategy and stock-picking funds were almost universally hit.

On the same scorecard, Citadel's Wellington fund was among the few positive performers, gaining 1.7% in October and 15.3% year-to-date. The vast majority of others were negative: LMR −0.8%, Dymon Asia −1.8%, Man Group's 1783 Fund −1.8%, Point72 −2.0%, Millennium −2.3%, North Rock −2.3%, ExodusPoint −2.4%, Verition −2.5%, Schonfeld −2.7%, Balyasny −3.4%, Pinpoint −4.5%, Marshall Wace's Eureka strategy −5.4%, Engineers Gate −5.5%, Walleye −5.9%.

Among extreme cases, Lone Pine fell 8.8% in October alone; credit-focused Arini had dropped 12.1% as of October 23, its worst monthly performance since inception.

Millennium, Point72, Schonfeld, Balyasny, ExodusPoint, Verition, Pinpoint, North Rock, Dymon, Man Group, LMR—these names usually appear in contexts of "stable, low volatility, double-digit annualized returns," but in October they lined up in a row of negative signs.

One month, wiping out an entire year

Just how devastating was October?

A multi-strategy fund managing tens of billions of dollars typically targets annualized returns of about 10%–15%, which spread across each month means normal fluctuations of just ±1%–2%. October's blow was 2%–6%—two to four times a normal month.

For a fund like Walleye, with roughly $17 billion in assets, −5.9% means about $1 billion evaporated in a single month.

A more intuitive way to look at it is to compare October's losses with the gains accumulated over the first nine months of the year.

· Citadel Wellington: October +1.7%, year-to-date +15.3%—the single-month gain equaled 13% of the prior nine months, barely denting annual returns.

· Millennium: October −2.3%, year-to-date +5.7%—giving back 28% of the cumulative gains from the first nine months.

· Point72: October −2.0%, year-to-date +8.6%—giving back 19% of the cumulative gains from the first nine months.

· Marshall Wace Eureka: October −5.4%, year-to-date +5.3%—giving back 48% of the cumulative gains from the first nine months.

· Walleye: October −5.9%, year-to-date −6.8%—a single month's loss pushed the full year into negative territory.

· Balyasny: October −3.4%, year-to-date −2.7%—positive through the first nine months, then turned negative in a single month.

Not to mention Situational Awareness, which didn't even make it to October—it lost 70% in July and blew up outright.

Losing so much they're returning capital, cutting staff, and shutting down strategies

Losing money naturally has its own chain reaction—in the fund world, it means shutting down an entire strategy line and returning capital to investors.

1. Walleye Capital: Cuts Head of Equity Long-Short, Returns Some Capital

Walleye Capital dismissed Anil Gondi, head of equity long-short, along with a "significant portion" of the internal long-short team. Gondi joined in July 2025 after a long stint as a stock-picking investment manager at Balyasny Asset Management and having founded 6elm Capital.

CEO and Chief Investment Officer Will England acknowledged in a letter to investors that investments over the past few years to improve the internal equity business—including bringing in new senior executives—"did not produce the expected results," with opportunity costs and resource consumption too high relative to returns. The firm also plans to return some capital to investors.

2. Engineers Gate: Cuts More Than Half of Synthesis Equity Team

After losing 5.5% in October, Engineers Gate directly cut most of its equity team called Synthesis, including the team head, leaving only 5 fundamental managers. In a client letter, they said that after the sharp reversal in AI and tech stocks, the team's performance was insufficient to continue in its current form; the firm also reduced capital or terminated cooperation with a small number of portfolios.

3. Samlyn Capital: Sells Nearly All Holdings Outside Financials

Samlyn, which manages about $7 billion, sold holdings in almost all sectors outside financials, cut multiple senior analysts, and shifted to focusing on the global financial sector.