Global stock markets fell sharply on Thursday, with the Nasdaq Composite dropping 5% and entering correction territory—a decline of at least 10% from recent highs. The Philadelphia Semiconductor Index (SOX) slumped 11%, marking its worst performance since March 2020, while the Dow Jones Industrial Average fell 2.2% and the S&P 500 slid 3.3%.
Major technology stocks led the declines, with Nvidia, Micron, Advanced Micro Devices, Dell, and Marvell Technology among those down by double digits. The selloff extended beyond U.S. markets, with the MSCI All-World Index dropping 2.5% and Europe’s STOXX 600 falling 0.67%.
Part 1: Immediate Action & Core Facts
1. Nasdaq enters correction amid AI stock rout
The Nasdaq Composite confirmed a correction on Thursday, defined as a decline of at least 10% from its most recent peak. The index had surged nearly 40% since Election Day 2024 on AI-driven optimism but reversed course sharply. The SOX semiconductor index fell as much as 11%, its steepest drop since the early months of the COVID-19 pandemic.
2. Election results and earnings trigger broad declines
Investors cited two primary catalysts for the downturn: Tuesday’s midterm election results, which saw sweeping Democratic victories, and weak earnings from chipmaker Qualcomm, whose shares plunged 11% after missing revenue estimates. Analysts also noted growing skepticism about the long-term returns on AI investments, with some companies reportedly scaling back spending.
Part 2: Deeper Dive & Context
Election Impact: Policy Shifts and Data Center Concerns
Democratic victories in Texas, Ohio, Michigan, and Georgia—key markets for data center construction—raised concerns about future AI infrastructure spending. Several newly elected officials campaigned on moratoriums or restrictions on new data center developments, citing energy and environmental concerns. The SOX index’s 11% drop reflected investor unease over potential regulatory hurdles.
Earnings and Sector-Specific Weakness
Qualcomm’s earnings miss deepened the selloff in semiconductor stocks, with the company’s smartphone chip sales falling short of expectations. Other major chip firms, including Micron, Western Digital, and Seagate, also saw declines of around 10%. Analysts attributed the downturn to declining demand for AI-related hardware and profitability concerns in the sector.
Broader Market Reactions
The S&P 500 erased nearly $2.5 trillion in wealth in a single day, while oil prices rose 2.58% to $97 per barrel amid renewed uncertainty over U.S. policy toward Iran. Vice President JD Vance suggested the party’s midterm losses were tied to the war, fueling speculation about potential diplomatic shifts.
Investor Sentiment and Long-Term Implications
Market strategists described the selloff as part of a longer-term unwinding of the AI trade, with some investors questioning whether AI investments would deliver sufficient returns. Adam Sarhan, CEO of 50 Park Investments, noted that many AI-related stocks were already in bear market territory, down 31% from 52-week highs. He added that corporate spending cuts, such as those by Apple, signaled weakening demand for AI products.
Key Losses on Thursday:
- Nasdaq Composite: -5%
- SOX Semiconductor Index: -11%
- Dow Jones Industrial Average: -2.2%
- S&P 500: -3.3%
- Qualcomm: -11%
- Micron: -10%+