Fears that had shadowed Wall Street for months finally triggered a broad sell-off on Thursday, as investors rushed for the exits. The rout began soon after the opening bell on the New York Stock Exchange and worsened through the day, dragging down everything from high-flying chipmakers like Nvidia Corp. to defensive names like Walmart Inc.
The hardest-hit companies were those at the heart of the artificial-intelligence boom, which earlier this year sent the stock market to one record high after another. All it took was the prospect that Democrats' sweeping victory in the Congressional elections may herald a political shift that taps the brakes on the industry's breakneck growth and the hundreds of billions of dollars being poured into computer equipment. By the close, the Nasdaq 100 Index was down over 6%, its worst drop since the Covid-19 tailspin in March 2020. Nvidia Corp., the world's most valuable company, tumbled over 9%, while a semiconductor index dropped 12% for its worst day since the start of the pandemic. All 30 Dow Jones Industrial Average companies fell, and the S&P 500 lost 4.4%.
Investors also rushed into Treasuries as a haven, and an ETF that piles into momentum trades had one of its worst days in over a decade. Greg Taylor, chief investment officer at Pender Fund Capital Management, said he was getting flashbacks to 2008 or 2001, adding that the market had too much focus on AI and that the unwind was something that needed to happen.
The selloff followed a dizzying two days since voters delivered a stinging rebuke to President Donald Trump and his Republican Party. Stocks had initially climbed on Wednesday as investors wagered a divided Washington would check Trump's power. But dip buyers were burned as attention shifted to potential cracks in the AI boom. Michael O'Rourke, chief market strategist at Jones Trading Institutional Services LLC, warned that a policy change would structurally alter the data center build-out, making current earnings forecasts no longer valid. The Nasdaq 100 has now erased $2.3 trillion in market value and sits nearly 15% below its Oct. 6 record.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing