NEW YORK — U.S. stocks plunged on Thursday in a ferocious sell-off in technology and artificial intelligence shares, as investors reassessed what the Democrats’ sweeping midterm victory means for the costly build-out of AI data centers, according to Reuters.
The Nasdaq fell 5.5%, the S&P 500 fell 4.4% and the Dow Jones Industrial Average fell 3.4%, with all 11 sectors of the S&P 500 ending lower, according to Reuters. Technology shares fell 7.3%, and the Philadelphia chip index fell 12%, its second-biggest fall on record. SanDisk fell 22%, Micron Technology, AMD and Marvell each fell about 17%, and Nvidia, the central company of the AI boom, fell 9%.
About $2 trillion was wiped off the Nasdaq’s market value in a single day, according to Reuters, and the index is now firmly in correction territory, down as much as 14% from the all-time high it reached only a month ago. Bitcoin fell 6% to about $75,000, and oil ended the day 3% to 4% higher after attacks on shipping near the Strait of Hormuz.
Why investors turned so fast
Only a day earlier, the same election results had lifted the Dow by more than 1,500 points, as markets bet that divided government would calm Washington and bring the war with Iran closer to an end. On Thursday the mood reversed. Investors focused instead on the fear that Democrats, who will control both houses of Congress from January, will use that power to slow the data center build-out — through tougher rules, local restrictions and closer scrutiny of the energy and water the facilities use.
“We are now seeing something of a buyers’ strike in tech. The rubber band could get stretched further to the downside,” Keith Lerner of Truist told Reuters. Lerner, who is in the bullish camp, said technology shares now look oversold — but that the market first has to find a floor.
The pressure was visible beyond the stock market. Dutch lender ING is putting about $500 million of data center loans up for sale at once, Bloomberg News reported, including a $25 million loan tied to a large New Mexico data center that forms part of the Stargate AI venture backed by OpenAI, SoftBank and Oracle. Bids are due on November 19, according to the report. Reuters said it could not immediately verify the report, and ING did not immediately respond to a request for comment.
What happens next
Interest-rate traders pushed back the expected timing of the Federal Reserve’s next rate increase to March, and now expect only about 40 basis points of further tightening in total. Attention turns on Friday to the October jobs report. Economists surveyed by Reuters expect employers to have added 65,000 jobs last month, with the unemployment rate unchanged at 4.2% and annual wage growth slowing to 2.9% — the first reading below 3% in nearly five and a half years, which would reinforce the view that the labor market is not a source of inflation.
For ordinary savers, the fall is a reminder of how much of the market’s value now rests on a small group of AI companies and the data centers behind them. Whether Thursday was a turning point or a one-day panic will depend on earnings, on the jobs data, and on how quickly the incoming Congress moves on data center rules. Reuters’ Trading Day report has the full market moves.
