Nasdaq Slides Toward Correction as Chip Stocks Plunge After Midterms

US stocks fell sharply on Thursday as a sell-off in artificial intelligence and semiconductor shares wiped out the gains from Wednesday’s post-election rally, Yahoo Finance reported. The Nasdaq Composite dropped around 5% during the session, leaving it on track to close in a correction, while the S&P 500 fell 3.3% and the Dow Jones Industrial Average lost more than 1,200 points, or 2.2%.

Proactive Investors, in a report published during the session, said the Nasdaq was more than 10% below last month’s record, putting it in correction territory, and that the S&P 500 was heading for its worst session since April 2025. More than US$2 trillion was erased from the US stock market within 50 minutes of the opening bell, according to the outlet.

Chip stocks lead the slide

The PHLX Semiconductor index sank 11%, Yahoo Finance said. Among the biggest decliners, Nvidia fell more than 6%, Micron lost over 12% and AMD dropped more than 13%, according to both Yahoo Finance and Proactive. Proactive said Broadcom fell 7%, Oracle slipped close to 5% and Qualcomm tumbled 9% after its outlook disappointed investors despite better-than-expected results.

Wall Street’s fear gauge, the VIX, surged more than 65% to as high as 27.45, which Futurum Equities chief market strategist Shay Boloor described as the biggest one-day jump in over two years, Yahoo Finance reported. Shares of SpaceX and Tesla each fell more than 9%.

Data centre worries

According to Proactive, investors were weighing what Democratic wins in the House, the Senate and key governorships could mean for AI infrastructure spending, amid concerns over possible restrictions on data centre development and higher electricity and water costs.

Nigel Green, chief executive of deVere Group, said power, water, land and the cost of financing “suddenly look less certain.” He cautioned against reading the sell-off as a sign that AI demand was disappearing, adding that operators with heavy debt and thin margins could face the most pressure, Proactive reported.

Before the open, UBS strategists said in a note cited by Reuters that data centre pauses would slow the pace of buildout into 2028, calling the slowdown a negative for semiconductors and AI infrastructure. Proactive said healthcare, consumer staples and energy shares gained as money rotated, while the 10-year Treasury yield eased to 4.83% and gold rose 0.9% to US$4,098 an ounce.

What’s next

Green expects volatility to persist and said the repricing could take more than a few trading sessions, according to Proactive. Reuters reported that markets are pricing in another Federal Reserve rate hike next month, following the central bank’s increase in September, with the October jobs report due on Friday.

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