Key Highlights:

  • Nasdaq Composite fell sharply and moved into correction territory, more than 10% below its October 6 record
  • Philadelphia SE Semiconductor index dropped close to 11%, its worst session since March 2020
  • Cboe Volatility Index spiked above 28, its highest level in roughly eight months
  • Leading chipmakers each declined by double digits amid fears of slower AI infrastructure spending
  • Several neocloud and data-center operators fell between 12% and 17%
  • All 11 S&P 500 sectors traded lower, with technology the biggest laggard
  • Odds of a December Federal Reserve rate hike eased amid the selloff

U.S. Equity markets suffered one of their sharpest single-day declines in over a year on Thursday, November 5, 2026, as investors beat a hasty retreat from the artificial intelligence trade following the Democratic Party’s sweeping victory in the midterm elections. The rout erased the bulk of Wednesday’s postelection rally and pushed the Nasdaq Composite into correction territory, trading more than 10% below the record it set on October 6.

The Dow Jones Industrial Average shed over 1,700 points at its session low, effectively wiping out all of Wednesday’s gain. The S&P 500, which tracks the broader U.S. market, declined sharply, while the small-cap Russell 2000 also slipped into correction territory. The Nasdaq-100, a narrower gauge of the largest non-financial companies on the exchange, had already confirmed a correction earlier in the week and was on pace to erase more than USD 2 trillion in market value.

Why the Market Is Rattled

The sharp Reversal appears to stem from investor anxiety that a changed political landscape in Washington could slow the breakneck pace of AI data-center construction that has powered much of the market’s gains this year. Democrats secured control of both chambers of Congress along with victories in several closely watched gubernatorial races, some in states central to the data-center buildout.

Vermont Senator Bernie Sanders, who caucuses with Democrats, publicly called for a national moratorium on new data-center construction, writing on Social Media that Americans do not want to see big technology firms gutting jobs and straining the environment. Local resistance to new facilities, tied to concerns over power-grid strain and water usage, has reportedly been building in several communities even as many projects already have approval. Industry estimates suggest that roughly 30% of expected U.S. data-center capacity additions planned for 2028 could face delays if construction pauses spread.

Chipmakers Lead the Rout

Semiconductor stocks absorbed the heaviest losses. The Philadelphia SE Semiconductor Index tumbled close to 11%, which could mark its worst single-day performance since the COVID-19-driven selloff of March 2020. Nvidia (NASDAQ:NVDA) declined by high single digits, while Broadcom (NASDAQ:AVGO) and AMD (NASDAQ:AMD) both posted double-digit losses. Micron (NASDAQ:MU) fell by more than 15%, and Intel (NASDAQ:INTC) dropped by roughly 8%. Qualcomm (NASDAQ:QCOM) also slid by double digits after the company’s fourth-quarter smartphone chip sales outlook came in weaker than anticipated, even as current-quarter results beat estimates. Software major Oracle (NYSE:ORCL) moved lower by around 7%, reflecting its exposure to the AI infrastructure narrative.

Neoclouds and Data-Center Stocks Tumble

Neocloud operators, smaller firms that Lease out AI computing capacity and have relied heavily on external financing, were particularly hard hit. CoreWeave (NASDAQ:CRWV), viewed by some as a bellwether for AI-spending anxiety, declined by double digits, while Nebius (NASDAQ:NBIS) and IREN (NASDAQ:IREN) each fell by mid-teens percentages. Shares of both CoreWeave and Nebius have reportedly lost half or more of their value since the Nasdaq’s October peak. Data-center operators Applied Digital (NASDAQ:APLD) and Cipher Digital (NASDAQ:CIFR) also posted steep declines.

Hyperscalers and Broader Market Also Retreat

Large hyperscale cloud providers, which had largely shrugged off Wednesday’s tech-sector weakness, joined the decline on Thursday. Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META) and Microsoft (NASDAQ:MSFT) all traded lower. Microsoft was reportedly tightening its oversight of certain data-center projects linked to some of its smaller partners.

Electric-vehicle maker Tesla (NASDAQ:TSLA) fell by double digits, extending recent losses, a move some observers linked to its chief executive’s substantial financial backing of Republican candidates during the election cycle. Utilities and equipment suppliers tied to the AI buildout, including GE Vernova (NYSE:GEV) and Constellation Energy (NASDAQ:CEG), also declined.

The selling was not confined to technology. All 11 S&P 500 sectors traded in negative territory, with consumer discretionary and industrials also posting notable declines. Industrial bellwether Caterpillar (NYSE:CAT), financial major JPMorgan Chase (NYSE:JPM), aerospace manufacturer Boeing (NYSE:BA) and retailer Nike (NYSE:NKE) each moved lower. Market Breadth was decisively negative, with decliners outnumbering advancers by wide margins on both the NYSE and Nasdaq.

Volatility Spikes to Multi-Month High

The Cboe Volatility Index, widely known as Wall Street’s fear gauge, surged to an intraday high above 28, its highest level in roughly eight months and its largest one-day jump since the market turmoil following the April 2025 Tariff announcements. Some Market Participants suggested that part of Thursday’s selling may reflect an unwinding of Wednesday’s rally and a broader Rebalancing by volatility-linked and leveraged trading strategies, which can amplify price swings, particularly late in the trading session.

Fed Rate-Hike Odds Shift

The equity sell-off appeared to ease market expectations for a Federal Reserve rate increase at its final meeting of the year on December 9. According to the CME FedWatch tool, which draws on fed funds futures pricing, the probability of a quarter-point hike fell to around 70%, down from roughly 83% a day earlier. Attention could now turn to the U.S. October non-farm payrolls report, due for release shortly after the session.

Where Things Stand

Market participants may continue to watch whether Thursday’s reaction reflects a short-term repricing of AI-related risk or a more lasting shift in sentiment toward the sector. Volatility measures, while elevated, had reportedly not yet reached levels historically associated with capitulation-style extremes, which could suggest further swings are possible in the sessions ahead. Investors may also watch for regulatory signals from incoming state and federal officials, along with upcoming economic data, for clues on the next direction for AI-linked equities.