Wall Street suffered its worst day in more than a year on Thursday as the Nasdaq plunged 5.5%, wiping about $3 trillion off the value of American stocks and dragging the tech-heavy index into a correction just two days after the Democrats swept the midterm elections.
Key Points
- The Nasdaq Composite fell 5.52% to 24,315.00, its biggest one-day drop in 19 months and more than 10% below its October 6 record high.
- The S&P 500 lost 4.36% to 7,353.73 and the Dow Jones fell 3.44%, or 1,833 points, to 51,523.06.
- Chipmakers led the rout: the Philadelphia Semiconductor Index plunged about 12%, its worst day since March 2020, with Nvidia down 9% and AMD and Micron down about 15% each.
- Investors fear the new Democratic Congress will tighten rules on artificial intelligence and slow the data-centre building boom.
The sell-off reversed Wednesday’s post-election rally in brutal fashion. On Wednesday, markets had celebrated the Democrats’ victory, with the Dow recording its best day in 18 months. By Thursday’s close, that optimism had evaporated, and the Nasdaq had logged its steepest daily fall since President Donald Trump’s tariff announcement in April 2025.
Chip stocks lead the rout
The damage was concentrated in the companies building and financing the artificial intelligence boom. Nvidia, the world’s most valuable chipmaker, fell about 9% and slipped back below where it ended last year, losing hundreds of billions of dollars in market value in a single session. AMD and Micron each gave up about 15%, Broadcom fell about 10% and Arm about 12%.
Qualcomm dropped 9.5% after missing Wall Street’s estimates for fourth-quarter smartphone chip sales, adding a company-specific worry to the sector-wide selling. Data-centre operators suffered even more: IREN and Applied Digital each fell more than 14%, while CoreWeave, which borrows heavily to build GPU capacity and rents it out, dropped almost 10%.
The Philadelphia Semiconductor Index, a basket of the 30 largest listed chipmakers, ended the day down about 12% at its lowest in more than six months. The VIX, Wall Street’s gauge of expected volatility, posted its biggest jump since December 2024.
Why investors are suddenly afraid of AI
The trigger was politics. Tuesday’s midterm elections gave Democrats control of both chambers of Congress, and voters in ten states rejected most local measures on data centres. Investors read that as a cap on the American AI build-out: tougher regulation, more scrutiny of data-centre projects and a slower pace of infrastructure approvals.
That political fear landed on a market already uneasy about the economics of the AI boom. Investors have grown worried that spending on data centres and chips is outrunning the cash those investments generate, while borrowing costs stay high with the 10-year Treasury yield near 5%. The stock market had priced in years of uninterrupted AI growth; Thursday was the day that assumption cracked.
The selling spread beyond the United States. In Asia, the Nikkei slid into a bear market as chip stocks fell across the region, and European technology shares followed Wall Street lower.
What happens next
Traders will now watch whether Friday brings a bounce or a second day of selling. The Federal Reserve’s next rate decision in December is firmly in focus: markets have been raising the odds of another hike, which would add to the pressure on high-growth technology stocks. For now, the AI trade that powered Wall Street’s gains for two years has suffered its sharpest reversal yet — and the new Democratic Congress has not even taken its seats.
Sources: Reuters via SRN News — https://srnnews.com/sp-500-futures-steady-after-midterm-rally-nasdaq-lags-on-chip-weakness/ ; Economic Times — https://economictimes.indiatimes.com/markets/us-stocks/wall-street-guide/us-stocks-today-dow-plunges-1800-pts-nasdaq-5-5-on-fears-of-ai-regulations-sp-500-wipes-out-3-trillion/articleshow/135586450.cms