The technology-heavy index dropped 5.5 per cent to 24,315, closing nearly 12 per cent below its October peak. The S&P 500 lost 4.4 per cent to 7,353.73, its steepest daily decline since April 2025, while the Dow Jones Industrial Average shed 1,833 points, or 3.4 per cent, to 51,523.06.
Semiconductor companies bore the heaviest losses. The Philadelphia Semiconductor Index tumbled 12.2 per cent, its largest one-day fall since April 2025, as investors questioned the sustainability of spending on the chips and computing infrastructure underpinning the artificial intelligence boom.
Nvidia, the leading supplier of advanced AI processors, fell 9.3 per cent. Advanced Micro Devices dropped 17.3 per cent, Micron Technology lost about 17.5 per cent and Broadcom declined more than 10 per cent. Sandisk, a maker of flash memory products, plunged approximately 22 per cent.
The losses extended beyond semiconductor manufacturers. Microsoft declined about 3.6 per cent, while shares of Meta Platforms and Alphabet also weakened. All 11 sectors of the S&P 500 finished lower, underscoring how selling in technology shares spread into the wider equity market.
Investors were reassessing the economics of the massive infrastructure programmes announced by technology groups, particularly the time required to generate sufficient revenue from AI services to justify investment in processors, electricity supplies and data centres.
The prospect of tighter oversight added to those concerns after Democrats secured control of both chambers of Congress in Tuesday’s midterm elections. Market participants weighed whether greater scrutiny of electricity consumption, environmental effects and the expansion of large computing facilities could delay projects or increase their costs.
No nationwide prohibition on new data centres had been enacted. Nevertheless, uncertainty about future congressional action contributed to pressure on businesses whose growth forecasts depend on sustained construction of AI infrastructure.
The market reversal followed a rally on Wednesday, when investors initially welcomed the election outcome. Thursday’s retreat erased those gains and exposed the sensitivity of richly valued technology companies to changes in expectations about capital expenditure and regulation.
Qualcomm’s earnings also weighed on sentiment towards chipmakers. Its financial update intensified questions about demand across parts of the semiconductor industry, although the broader selloff reflected concerns extending well beyond any individual company’s performance.
Technology shares have accounted for a substantial proportion of Wall Street’s gains, leaving major stock benchmarks particularly vulnerable when investors reduce exposure to a relatively small group of heavily weighted companies. Nvidia alone made a substantial contribution to Thursday’s decline in the S&P 500.
The Nasdaq’s fall below the correction threshold marked a decline of more than 10 per cent from its October 6 record close. The S&P 500, although sharply lower on the day, remained less than 10 per cent beneath its own record, illustrating the particularly severe pressure on technology shares.
The selloff also reached overseas markets. South Korea’s Kospi index declined 5.3 per cent, while Japanese equities weakened. European shares recorded more modest losses, reflecting differing market exposure to semiconductor manufacturers and the American technology sector.
Investors sought some protection in government bonds, pushing US Treasury yields lower. The decline in yields contrasted with persistent concerns about borrowing costs for companies financing data-centre expansion through debt issuance.
The retreat occurred against a backdrop of inflation concerns and geopolitical tensions, which have complicated expectations for interest rates and financing conditions. Higher borrowing costs can reduce the present value investors assign to profits expected many years into the future, a consideration particularly relevant to growth-oriented technology businesses.
Market volatility increased as the selling accelerated. The Cboe Volatility Index, a widely followed gauge derived from S&P 500 options prices, finished around 27, indicating heightened demand for protection against further fluctuations.
Not every company declined. AppLovin shares rose sharply following its financial results and an expanded share repurchase programme, demonstrating that company-specific developments continued to influence trading even as the broader market retreated.
The Russell 2000 index of smaller American companies fell about 4.4 per cent, showing that the session’s weakness was not confined to the largest technology businesses. Despite Thursday’s losses, the main US equity benchmarks remained above their levels at the beginning of the year.
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