Nasdaq sinks 5.52% as AI chip stocks slide on Democratic midterm sweep

Nasdaq and Dow give back the post-election rally

Wall Street closed sharply lower on Thursday, 5 November 2026, reversing most of the gains made in the rally after the midterm elections. The Nasdaq Composite fell 5.52% to 24,314.99 points, putting it in a correction more than 10% below its record close of 6 October. The S&P 500 lost 4.36% to finish at 7,353.73 points, while the Dow Jones Industrial Average shed 1,833.06 points, or 3.44%, to close at 51,523.06. The Russell 2000 small-cap index also slipped into correction territory, and all three major indexes posted their worst session since April 2025.

Chip and AI infrastructure stocks lead the losses

Semiconductor and data center shares took the heaviest hits, with stocks tied to AI infrastructure falling for a second straight session. The Wall Street Journal put the loss in the Philadelphia Semiconductor index at 12%, while another report cited a fall of about 8.5%. Nvidia dropped 9.3%, Dell lost 15% and CoreWeave, which supplies computing power for AI applications, fell 9.8%. Qualcomm shares declined even though its results beat expectations, because its forecast for smartphone chip sales disappointed. The Nasdaq 100 fell 6.4%, its worst session since March 2020, and estimates of the value wiped out differ: the Wall Street Journal put it at 2.5 trillion dollars, while another report cited 2.3 trillion.

Nasdaq Composite5.52%

S&P 5004.36%

Dow Jones Industrial Average3.44%

Nasdaq Composite

5.52 %

S&P 500

4.36 %

Dow Jones Industrial Average

3.44 %

Data from the article text

Democratic control of Congress raises regulation fears

Investors worry that Democratic control of both the House of Representatives and the Senate, along with wins in key governor races, could slow the buildout of data centers. Bernie Sanders, the Vermont senator who works with Democrats, has called for a national moratorium on data center construction. In a post on X on the evening of 4 November, he argued that Americans do not want big tech oligarchs damaging the environment, eliminating jobs and threatening humanity's future. Coverage of the sell-off also points to the possibility of stronger consumer protections and stricter oversight of AI development. Jonathan Corpina, a senior executive at Meridian Equity Partners, said the market remained extremely vulnerable given the uncertainty ahead.

Bonds, rate expectations and oil

Treasury yields eased on the day, with the 10-year falling to 4.84% from 4.90% on 4 November, according to daily US Treasury Department data. The 30-year slipped to 5.25% from 5.28%, and the 2-year dropped to 4.46% from 4.58%. Reuters reported that the CME FedWatch tool showed an 80.7% probability of a rate hike of at least 25 basis points in December, with attention turning to October employment figures. Brent crude rose 3.88% to 98.29 dollars a barrel and WTI gained 2.72% to 90.52 dollars, rebounding from a fall of more than 8% on 4 November after new attacks on tankers in the Persian Gulf revived supply concerns.

Volatility jumps to an eight-month high

The Cboe Volatility Index, known as the market's fear gauge, jumped 11.5 points to an intraday high of 28.09, its highest level in eight months. The index closed at 27.78, and its intraday move was the largest since the turmoil that followed the tariff announcements of April 2025. Thursday's selloff came after investors had largely ignored the threat to AI stocks posed by the Democratic election results on 4 November. Market participants now appear to be pricing in slower infrastructure spending and tighter rules on AI.