Wall Street slumps as AI stocks tumble and Nasdaq nears correction
Chipmakers and large-cap tech stocks saw steep declines following fears of tighter artificial intelligence regulation after the Democrats' midterm election victory.
The Nasdaq Composite was set to confirm a technical correction on Thursday as chipmakers tumbled following the Democrats' sweeping midterm election victory, according to The Indian Express.
The election results, which included victories in some key data-center states, fueled concerns regarding a potential slowdown in the AI data center buildout. This movement put the Nasdaq and S&P 500 on track for their largest one-day drop since the April 2025 "Liberation Day" selloff.
Nvidia shares dropped 6.4 per cent, while the Philadelphia SE Semiconductor index fell nearly 11 per cent. Qualcomm slid 13.5 per cent after reporting fourth-quarter smartphone chip sales that fell short of Wall Street estimates. Other tech losses included Meta Platforms at 5.7 per cent, Amazon.com at 4.3 per cent, and Alphabet at 3 per cent.
Tesla and SpaceX, both led by Elon Musk, tumbled more than 10 per cent each. Melissa Brown, global head of investment decision research at SimCorp, said investors appear to be recognising that newly elected members of Congress and governors may look to slow the pace of AI infrastructure development.
By 11:00 a.m. ET, the Dow Jones Industrial Average fell 1,146.83 points or 2.15 per cent to 52,209.29. The S&P 500 lost 246.37 points or 3.20 per cent to 7,440.29, and the Nasdaq Composite dropped 1,273.18 points or 4.95 per cent to 24,463.34.
Market attention now turns to the US October non-farm payrolls data due on Friday. This follows comments from Cleveland Federal Reserve President Beth Hammack and Richmond Fed President Thomas Barkin, who both hinted at the possibility of future rate hikes.
