The Nasdaq Composite Index fell 1,422 points, or 5.5%, to close at 24,315 on Thursday, marking entry into correction territory after dropping more than 10% from its all-time high set in October. The broader S&P 500 declined 335 points, or 4.4%, to 7,354, while the Dow Jones Industrial Average plunged 1,833 points, or 3.4%. The selloff reversed Wednesday's gains, when markets had rallied after the midterm elections cleared uncertainty about congressional control.
Investor concern centers on the potential for Democratic majorities in Congress to regulate the artificial intelligence industry and restrict data center development, according to market analysts. Companies developing AI are heavily dependent on expanding data center capacity, with major investments being funneled into infrastructure buildout. Chris Larkin, managing director of trading and investing for E*TRADE from Morgan Stanley, said that although markets had rallied Wednesday after the election results, "there were visible cracks in the AI ecosystem, and they widened on Thursday amid investor concerns about a potentially slower data center buildout with Democrats in charge of Congress."
Technology and chip stocks bore the brunt of the decline. Nvidia, whose advanced chips are central to developing AI models, saw shares fall 9.2%, a day after dropping 3.2%. Advanced Micro Devices tumbled 17.3%, while CoreWeave, which rents access to AI chips over the cloud, fell 9.8%. Trump Media & Technology Group, owner of Truth Social, continued its slide with shares falling 10.5%, reaching an all-time low since the company's public listing in March 2024 and hovering around $4.
The market turmoil could affect high-profile corporate plans. Wall Street analyst Adam Crisafulli of Vital Knowledge said the rout was severe enough to potentially delay an anticipated initial public offering by Anthropic, a major AI company. The IPO had been expected to take place in November and raise as much as $100 billion. Some market observers worry that enormous investments in AI have created a stock market bubble, with valuations becoming detached from companies' underlying fundamentals.
For savers and investors in the US, the sharp market decline means portfolio values have fallen significantly, particularly for those holding technology and AI-related stocks, while uncertainty about future regulation weighs on recovery prospects.