US Stock Market Today: Nasdaq Falls 5.52% as AI Stocks Sell Off, Dow Drops 1,833 Points

US stocks closed sharply lower on Thursday, recording their worst single-day fall in 19 months as technology and semiconductor shares led a broad sell-off. The Nasdaq Composite fell 5.52 percent, the S&P 500 lost 4.35 percent, and the Dow Jones Industrial Average dropped 3.44 percent.

The decline followed a strong rally the previous day after the midterm elections. Within one session, investors shifted from optimism about the election result to concern that a Democrat-controlled Congress could bring stricter regulation for artificial intelligence and data centres.

How the major indexes closed

The Dow Jones Industrial Average dropped 1,834.84 points, or 3.44 percent, to 51,521.28. The S&P 500 fell 334.82 points, or 4.35 percent, to 7,353.80. The Nasdaq Composite decreased 1,421.52 points, or 5.52 percent, to close at 24,315.00.

The Russell 2000, which tracks smaller US companies, fell 127.06 points, or 4.4 percent, to 2,729.89. The Volatility Index, often called the market fear index, jumped 61.89 percent to 26.89.

The Nasdaq is now 11.9 percent below its all-time high set last month, putting it in correction territory. A correction is commonly described as a fall of more than 10 percent from a recent high.

AI and chip stocks led the fall

Chipmakers were among the hardest hit. The Philadelphia Semiconductor Index recorded its largest single-day percentage drop since March 2020. Weak results from Qualcomm, which missed fourth-quarter smartphone chip sales estimates, added to the pressure on the sector.

Investors also reassessed the heavy spending on artificial intelligence. Market sentiment weakened amid growing questions about when large AI investments would turn into meaningful profits, and about whether data-centre expansion could face new limits.

Reports said about 3 trillion dollars in market value was wiped from S&P 500 companies during the session. AI-linked corporate debt also came under pressure, with data-centre companies facing higher borrowing costs.

Why regulation fears mattered

Analysts linked the sell-off to the Democrats' midterm victory. Investors feared tighter federal scrutiny of AI safety, stricter local restrictions on data-centre construction, and possible delays to infrastructure projects.

Michael McCarthy, chief executive of Moomoo Australia and New Zealand, said fear had gripped investors that the Democratic sweep would lead to regulation and a slowdown of the AI boom that has driven US growth and computer component supply chains.

Mark Fuchs, chief investment officer at Fuchs Capital Partners, said Democrats had taken a more circumspect view on data centres and AI, and that markets were pricing in a possible reduction in spending and higher bars for new projects.

Elevated Treasury yields also reduced appetite for shares by raising borrowing costs, while comments from Federal Reserve officials about possible rate increases added to investor concerns.

What happened in other markets

The sell-off spread to Asia on Friday. Stocks in Seoul plunged about 8 percent, prompting a trading halt after the open, while the Nikkei in Tokyo fell more than 6 percent.

In commodities, Brent crude stood at 98.40 dollars per barrel, after trading above 110 dollars earlier in the week. Gold rose 0.6 percent to 4,080 dollars an ounce as investors sought safer assets.

European markets ended mostly lower. The pan-European Stoxx Europe 600 index fell 0.38 percent to 654.87 points, while Britain's FTSE 100 fell 0.43 percent and Germany's DAX 40 fell 0.43 percent.

What investors will watch next

Attention now turns to the October US jobs report, due on Friday at 8:30 a.m. Eastern Time. Investors will use it for clues about labour-market conditions and the Federal Reserve's policy outlook.

US stock futures will also be watched for signs of whether Thursday's sell-off was a sharp reaction to the election result or the start of a longer reassessment of AI valuations. For now, the market's message is clear: after months of gains driven by AI, investors are asking harder questions about regulation, spending, and returns.

Sources

The Malaysian Reserve — US stock markets see worst day since 2025

The Economic Times — Stock Market Highlights: Dow plunges 1,800 pts, Nasdaq 5.5% on fears of AI regulations

Reuters — Analysts and investors react to AI market rout