Wall Street suffered its worst day in more than a year on Thursday, as a brutal sell-off in technology and artificial intelligence stocks wiped an estimated $2.5 trillion off the Nasdaq and dragged the index into correction territory. The rout followed the Democrats' sweeping victories in the US midterm elections, which investors fear could bring tighter scrutiny of the AI data-centre boom. Stocks steadied on Friday, with the Nasdaq recovering just over 1%, but the index remains more than 10% below its October record.
What happened on Thursday
The scale of Thursday's fall was historic. The tech-heavy Nasdaq Composite plunged 5.52% to close at 24,315 — its steepest single-day decline since April 2025 and its worst session in 19 months — while the S&P 500 fell 4.36% to 7,353.73 and the Dow Jones Industrial Average shed 1,833 points, or 3.44%, to settle at 51,523.06. All three major US indices recorded their steepest single-day declines since April 2025, according to NDTV Profit.
| Index | Thursday 5 Nov | Close |
|---|---|---|
| Nasdaq Composite | −5.52% | 24,315 |
| S&P 500 | −4.36% | 7,353.73 |
| Dow Jones | −3.44% (−1,833 pts) | 51,523.06 |
The damage was concentrated in the seven largest technology companies, collectively known as the Magnificent Seven. Together they lost an estimated $1.006 trillion in market value in a single session, according to data compiled by NDTV Profit.
| Company | Share fall | Value wiped out |
|---|---|---|
| Nvidia | −8.85% | ~$431 billion |
| Tesla | −11.88% | ~$181 billion |
| Microsoft | −2.96% | ~$123 billion |
| Apple | −1.66% | ~$85 billion |
| Alphabet | −1.84% | ~$65 billion |
| Amazon | −2.11% | ~$61 billion |
| Meta Platforms | −4.26% | ~$60 billion |
Chipmakers bore the brunt of the selling. The Philadelphia Semiconductor Index plunged 12%, its worst day since the Covid-19 pandemic began in March 2020. AMD and Micron each crashed around 17%, while Intel dropped 10.3%, according to reports from the session.
Why investors sold
The sell-off followed the Democrats' sweeping victory in the US midterm elections, which handed them control of Congress. Investors are concerned that the changing political landscape could bring tighter scrutiny of the rapid expansion of AI data centres — including possible restrictions on new projects and higher costs linked to their enormous electricity and water requirements. Such measures would hit the companies supplying chips, servers and other infrastructure for AI development hardest, which is where the selling was concentrated.
"The big rout of 5.6 per cent in Nasdaq was triggered on concerns of big slowdown in data centre spending since the Democrats are opposed to massive data centre investment." — Dr V K Vijayakumar, chief investment strategist at Geojit Investments, quoted by The Hindu Business Line
The political shift landed on top of a deeper unease. Major technology companies have committed hundreds of billions of dollars to AI infrastructure, and investors are increasingly asking whether those investments will generate sufficient returns. Thursday's rout was, in that sense, both a political reaction and a valuation reckoning: the AI trade that powered markets for much of the year suddenly looked expensive and exposed.
President Donald Trump blamed Democrats for the hit to Americans' retirement savings, according to NDTV, as the post-election rally on Wall Street came to a screeching halt.
The concern is not that AI spending stops, but that it slows. Data-centre construction is the physical backbone of the AI boom: every restriction, delay or cost increase ripples back through chipmakers, server builders and cloud providers — the same companies that led Thursday's fall.
The sell-off went global
The rout did not stay in New York. It spread into Asia on Friday, with Japan's Nikkei entering bear-market territory and South Korea's Kospi triggering a circuit breaker, as BreakingHour reported. European markets also fell as the technology sell-off crossed time zones, and the anxiety is visible beyond trading floors: on Friday, protesters broke into the construction site of a Microsoft data centre in Amsterdam at the start of two days of rallies across Europe against the energy-hungry facilities, according to Reuters.
Friday's partial rebound
Friday brought some relief, but not a recovery. The Nasdaq rose 1.09% to 24,579.42 and the S&P 500 added 0.31% to 7,376.86, while the Dow slipped 0.46% to 51,285.73, according to Stock Market Watch's nightly digest. The rebound was led by the same semiconductor stocks that had been hit hardest: Micron rose 5% after plunging 17% the previous day, and Nvidia climbed 2%.
A stronger-than-expected October jobs report helped. Nonfarm payrolls rose by 165,000, shattering the consensus forecast of around 59,000, while the unemployment rate fell to 4.1% from 4.2%. The hot jobs data pushed the 10-year Treasury yield toward 4.88% and raised expectations of another Federal Reserve rate rise in December — a reminder that the market's problems are not only political.
Friday's bounce does not undo the week. The Nasdaq remains more than 10% below its recent high, and both the S&P 500 and the Nasdaq were on course for a fourth consecutive weekly decline — their worst week since June, according to market reports. A one-day rebound after a historic fall is bargain hunting, not a verdict.
What to watch next
Three things will decide whether Thursday was a correction or the start of something deeper. First, the US October consumer price index, due on Tuesday 10 November, will shape expectations for the Federal Reserve's December meeting. Second, the data-centre debate itself: whether the new Congress moves from campaign rhetoric about AI restrictions to actual legislation, and how local opposition — like the Amsterdam protests — affects permitting. Third, earnings from chip and cloud companies in the coming days, which will show whether AI infrastructure spending is still growing or starting to cool.
Frequently asked questions
What is a market correction?
A correction is a fall of at least 10% from a recent high. The Nasdaq crossed that line on Thursday, closing more than 10% below its October record. Corrections are common in bull markets, but they can also be the first leg of a deeper bear market — the distinction only becomes clear in hindsight.
Why did the Democrats' midterm win hit tech stocks?
Investors fear a Democratic-led Congress will scrutinise the AI data-centre build-out more closely — restricting new projects, raising costs around electricity and water use, and slowing the infrastructure spending that chip and cloud companies depend on. The fear is about the pace of future spending, not about AI itself.
How much money was actually lost?
The Magnificent Seven lost an estimated $1.006 trillion in combined market value on Thursday, according to NDTV Profit's calculations, with Nvidia alone losing about $431 billion. The Nasdaq as a whole shed an estimated $2.5 trillion in market value, according to Dow Jones data cited by several outlets. These are paper losses in market capitalisation, not cash withdrawn from the system.
Did markets recover on Friday?
Partly. The Nasdaq rose 1.09% and the S&P 500 gained 0.31% on Friday, led by a rebound in chip stocks and helped by a strong jobs report. But the Dow fell again, the Nasdaq is still in correction territory, and both major indices were heading for a fourth straight weekly loss.
Key takeaways
- The Nasdaq plunged 5.52% on Thursday 5 November — its worst day since April 2025 — entering correction territory more than 10% below its October record.
- The Magnificent Seven lost an estimated $1.006 trillion in a single session; Nvidia alone shed about $431 billion.
- Investors fear Democratic midterm victories will slow AI data-centre expansion through tighter regulation and higher costs.
- The sell-off spread worldwide, with Japan's Nikkei entering a bear market and protests against data centres erupting in Europe.
- Friday brought a partial rebound — Nasdaq up 1.09% on bargain hunting and a strong jobs report — but the index remains in correction.
The week that began with a post-election rally ended with the market's worst rout in 19 months and a warning: the AI boom's biggest risk may no longer be the technology, but the politics around the buildings that power it. Tuesday's inflation data and the new Congress's first moves on AI will tell investors whether Thursday was a buying opportunity or a turning point.
