By Islam El-Sakka
The tech-heavy Nasdaq composite index slumped up to 5% on Thursday, entering correction territory more than 10% below its recent record high and marking its worst single-day decline in 18 months. The sell-off was driven by growing expectations that the artificial intelligence industry will face tougher regulation following Democratic gains in this week's U.S. midterm elections.
Chip Stocks Lead Sell-Off
Semiconductor shares bore the brunt of the decline, with memory maker SanDisk plunging 19% and hard drive manufacturer Western Digital falling 16.5%. Nvidia, the chipmaker at the center of the AI boom, dropped 6.7% to lead losses on the Dow Jones Industrial Average.
Market Volatility Spikes
Wall Street's fear gauge, the VIX, surged 40% to its highest level since the early weeks of the Iran war, signaling heightened investor anxiety. Analysts attributed the spike to anticipation that Democratic governors will clamp down on new datacentre expansions after the party won a series of gubernatorial races, while voters rejected datacentre projects in local ballots across the country.
Dow Jones Drops Over 1,000 Points
The Dow Jones Industrial Average fell more than 1,000 points, a 2% decline to 52,264, in late morning trading. Goldman Sachs shares slid 5.7%, adding to the broad-based retreat. The drop represents the sharpest one-day fall since former President Donald Trump announced "liberation day" tariffs in April 2025.
Analysts Warn of Slowing Datacentre Buildout
Neil Wilson, investor strategist at Saxo UK, described Thursday's action as a "complete capitulation level event" in tech stocks. Tech analyst Dan Ives warned that Democratic control of the Senate will create major hurdles for AI and technology legislation over the next two years, likely slowing the pace of datacentre construction.
European Markets Also Decline
The sell-off spread overseas, with Britain's FTSE 100 closing down 46 points, or 0.4%, at 10,782.66 after an early rally fizzled out.
