The Dow Jones Industrial Average shed 1,844 points, erasing about all of its postelection gains, as investors dumped technology stocks. The sell-off centered on fears that a Democratic sweep could slow the data-center buildout.
The Dow Jones Industrial Average shed 1,844 points, or 3.7%, erasing about all of its advance from Wednesday's postelection rally. Investors accelerated their move away from tech stocks on fears of a data-center buildout slowdown.
Nasdaq and Russell 2000 fall into correction
The Nasdaq Composite declined 5.4% and dipped into correction territory, trading more than 10% below a record set last month. The S&P 500 was down 4.3%, heading for its worst day since April 2025. The small-cap Russell 2000 decreased 4.4% and also entered a correction.
On Wednesday, by contrast, the Dow jumped more than 1,500 points for its best day since April 2025 after a decisive midterm win for Democrats.
Chip and AI stocks lead the drop
Investors fear that a Democratic sweep of both chambers of Congress, plus wins in key gubernatorial races, could decelerate the data center buildout. Stocks tied to artificial intelligence, particularly chips and data centers, slid for a second day.
Broadcom and Nvidia each fell 9%, and Oracle moved lower by 7%. Qualcomm beat earnings estimates, but its stock dropped 10% on a weaker-than-expected outlook. The iShares Semiconductor ETF was down more than 10%, which would be its worst day since March 2020.
Tim Holland, chief investment officer at Orion, said investors are stepping away until they better understand what the midterms mean for the AI capex cycle.
Selling spreads beyond tech
The pressure reached other sectors. Caterpillar declined 5% and JPMorgan fell 4%, while Boeing and Nike pulled back 3%.
Keith Lerner, chief investment officer at Truist Wealth, said the tech sell-off is now feeding into the broader market. According to Lerner: "The rubber band is becoming increasingly stretched." The Mag7 stocks were losing close to an aggregate $900 billion heading into the final hour of trading.
Circuit breakers remain far off. The S&P 500 bottomed out with a loss of 4.23% at its low, while Level 1 halts require a drop of 7% or more.
Source: CNBC
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