Dow Falls 1,833 Points and Nasdaq Enters Correction as AI Selloff Erases Post-Election Rally
Wall Street gave back Wednesday's post-midterm rally and more on Thursday, with the Dow down 3.44%, the S&P 500 down 4.36% and the Nasdaq down 5.52% as chip stocks sank 12% on concern the new Democratic Congress will slow the AI data-center buildout.
U.S. stocks fell hard on Thursday, erasing the post-midterm rally from the day before and pushing the Nasdaq into correction territory as investors sold chip and artificial intelligence stocks on concern that the new Democratic Congress will slow the buildout of data centers.
The Dow Jones Industrial Average fell 1,833.06 points, or 3.44 percent, to close at 51,523.06. The S&P 500 fell 334.89 points, or 4.36 percent, to 7,353.73, its worst day since April 2025. The Nasdaq Composite fell 1,421.52 points, or 5.52 percent, to 24,315.00, more than 10 percent below its October 6 record close of 27,599.89.
Companies in the S&P 500 shed $2.9 trillion in market value in one day, and Nasdaq companies lost $2.5 trillion, both single-day records, according to the New York Post. The seven largest technology stocks alone lost $1.04 trillion. Nvidia lost $374 billion in market value, Tesla $161 billion and Microsoft $117 billion, the Post reported.
Chip stocks lead the drop
The PHLX Semiconductor Index fell 12.25 percent to 9,011.14. Broadcom fell 10 percent and Nvidia 9 percent. Qualcomm fell 9 percent after it issued a weak forecast for phone-chip sales, even though its earnings beat Wall Street estimates. Oracle fell 7 percent. Neocloud firms that buy AI computing power and lease it to others fell further, with CoreWeave down 10 percent and Nebius down 15 percent.
The Nasdaq 100 fell 6.36 percent to 26,629.81, and the Russell 2000 index of smaller companies fell 4.45 percent. The Cboe Volatility Index, Wall Street’s gauge of expected swings in stock prices, jumped about 69 percent to 28.18.
Why investors sold
Reuters tied the selloff to growing opposition to data-center expansion after the Democrats’ midterm wins, according to The Retest. Fifty ballot measures dealing with data centers were on ballots across the country on Tuesday, and voters rejected new centers in at least 47 cases, according to data compiled by Ballotpedia and cited by the New York Post. UBS analysts estimated that about 30 percent of planned data-center capacity across the country could be affected in 2028.
Data-center opponents also won governor races in Texas, Georgia and Ohio on Tuesday. Dan Ives, an analyst at Yorkville Ives and Co., wrote in a Thursday note that the growth rate into 2028 “will clearly moderate significantly as the data center buildout comes at a much slower pace given the political map especially in the state of Texas,” according to the New York Post.
OpenAI, the company behind ChatGPT, released a new framework on Thursday that included pledges to cut power use during peak times, share data about effects on noise, water and energy use, and keep residents from paying higher bills, the New York Post reported.
The selling came a day after the Dow gained 1,569 points on Wednesday, its best post-election rally since 1982. Not all markets fell on Thursday: gold futures rose 0.67 percent to $4,100.40 an ounce, oil rose, with West Texas Intermediate crude up 3.22 percent to $90.96 a barrel, and the yield on the 10-year Treasury note slipped to about 4.84 percent.
The next test for the market comes Friday, when the Labor Department releases the October jobs report at 7:30 a.m. Central time. FactSet’s median forecast is for 65,000 new jobs. First-time jobless claims fell by 6,000 to 189,000 in the week ended October 31, and third-quarter productivity rose at a 3.6 percent annual rate, according to data cited by The Retest.
Reporting based on coverage by the New York Post and The Retest.
