U.S. stocks suffered a steep, broad-based sell-off on Thursday, wiping out the post-election rally from the day before. The Nasdaq Composite closed in correction territory, meaning it is more than 10% below its record close from October 6, as investors dumped artificial intelligence and semiconductor stocks. The main trigger was worry that Democratic control of Congress after Tuesday’s midterm elections could slow or add costs to the build-out of AI data centers, which has driven much of this year’s market gains.
What Moved Markets
The Dow Jones Industrial Average fell 1,833.06 points, or 3.44%, to close at 51,523.06. The S&P 500 dropped 334.89 points, or 4.36%, to 7,353.73. The Nasdaq Composite lost 1,421.52 points, or 5.52%, to finish at 24,315.00. Analysts noted it was the worst day for the S&P 500 and Nasdaq since the April 2025 tariff sell-off.
The damage was centered in chip stocks. The PHLX Semiconductor Index plunged about 12%. Strategists described the move as partly a rush by hedge funds and other big investors to lock in profits on this year’s biggest winners, which can feed on itself when many sell at once. Investors are also trying to work out which industries gain or lose under a new balance of power in Washington. Rising electricity prices have made data center construction a political issue, and the market is pricing in the chance that the AI build-out becomes slower and more expensive.
Fear gauges jumped as well. The Cboe Volatility Index (VIX), often called Wall Street’s fear gauge, surged more than 65% at its peak, its biggest one-day jump in over two years. Retail investors, who often buy dips, were net sellers of individual stocks at the fastest pace since March 2020, according to Vanda Research. Bitcoin also fell about 5%, dipping below $76,000 at one point. Oil prices rose, with Brent crude near $98 a barrel and U.S. crude near $90, as investors watched for any sign of progress toward ending the conflict in the Middle East.
Notable Movers
Nvidia (NVDA) fell roughly 8% in afternoon trading as the AI chip leader was caught in the rout. Advanced Micro Devices (AMD) dropped about 15% even as CEO Lisa Su said she sees no slowdown in demand for AI chips and called the market “a little bit short-sighted.”
Tesla (TSLA) tumbled roughly 12% in afternoon trading, while SpaceX (SPCX) fell around 8% to 9%. Investors worried that Democratic wins, including in the companies’ home state of Texas, could create regulatory hurdles for AI projects and for a possible merger between the two firms.
Palantir (PLTR) fell more than 10% at its lows as the sell-off spread from chipmakers to software companies tied to the AI build-out. Data center operators such as CoreWeave (CRWV), IREN and Nebius each dropped more than 12%.
One bright spot was AppLovin (APP), which jumped as much as 23% in premarket trading after reporting third-quarter revenue of $2.18 billion, above the $2.07 billion analysts expected, and forecasting fourth-quarter revenue well above estimates. Wendy’s (WEN) also drew attention after rejecting a $1.4 billion takeover offer from Nelson Peltz’s Trian Fund Management as too low.
Looking Ahead
All eyes turn to Friday’s monthly jobs report, which could shape expectations for interest rates at a time when inflation worries are rising. The Bank of England raised its key rate to 4% on Thursday, its first hike since 2023, a reminder that price pressures remain a concern globally. A report from Challenger, Gray & Christmas showed announced layoffs in October at their lowest level since 2023. After a day like this, expect volatility to stay elevated, and remember that sharp one-day drops are often followed by large swings in both directions. Investors may want to review how concentrated their portfolios are in AI-related stocks.