Nasdaq Falls 5.5% as AI Stock Selloff Widens
Key Facts
U.S. stocks ended Thursday’s Nov. 5 session sharply lower, with the S&P 500 falling 4.4%, the Dow Jones dropping 3.4% and the Nasdaq declining 5.5%, according to data cited by the Associated Press. The S&P 500 lost about 334.89 points to close at 7,353.73. The Dow Jones fell 1,833.06 points to 51,523.06, while the Nasdaq shed 1,421.52 points to end the session at 24,315. The selloff was led by stocks tied to the construction of AI data centers, amid concerns that new projects could be halted after Democratic victories in the midterm elections. The decline again highlighted the sector’s sensitivity to expectations for AI infrastructure spending.
The S&P 500’s loss was its worst since the global market turmoil linked to the “Liberation Day” tariffs in April 2025, according to the Associated Press. The decline also erased more than the gains from the previous session, which had been the index’s best in three months. Pressure spread across the market, with all 11 S&P 500 sectors falling, according to Reuters. The technology sector dropped 7.3%, while the Philadelphia Semiconductor Index lost 12%, its second-biggest decline ever. The figures reflect a broadening selloff from chipmakers to technology sectors tied to building and operating data centers.
Losses were pronounced in chip and infrastructure companies, with AMD falling 17.3%, CoreWeave dropping 9.8% and GE Vernova declining 7.5%, according to the Associated Press. The news agency linked the selloff to concerns that potential restrictions on data center construction could slow the expansion underpinning demand for these companies. It said slower construction could mean fewer purchases of AI chips. The impact could also extend to demand for electricity and other products and services tied to the data center boom, the same source said. The decline thus swept up companies supplying computing components, infrastructure and power, alongside chipmakers.
Political concerns preceded the session’s decline, but pressure on the sector was already present before the elections. The Associated Press said high borrowing costs had raised concerns about a slowdown in data center construction, while investors had warned that AI stock prices had risen too far and may have entered a bubble. UBS analysts estimated that about 30% of expected additions to U.S. data center power capacity in 2028 could be at risk if potential construction pauses were imposed. In an assessment cited by Reuters, a strategist at Quilter said AI had been “a massive driver of the U.S. economy” and that any restrictions on its development could slow growth. Those concerns coincided with other pressures on technology stocks, including heavy spending, higher borrowing costs and declining free cash flow at major cloud computing companies, Reuters said.
The session’s losses mark a sharp reversal for the Nasdaq, which fell 11.9% from its record high set in October, putting it in correction territory, according to the Associated Press. Nvidia’s losses also showed the decline spreading to leading chip stocks; after the session’s losses, the stock was down 2.6% year to date. That follows annual gains of about 39% in 2025, 171% in 2024 and 239% in 2023, according to the news agency. Elsewhere, the yield on the 10-year U.S. Treasury fell to 4.84% from 4.90% at Wednesday’s close, after reaching 4.95% on election night and topping 5.30% the previous month. Brent crude rose 3.9% to $98.29 a barrel, recovering some of its nearly 9% decline the previous day.
Attention after the session turns to U.S. October jobs data, due Friday, Nov. 6. Economists expected a net increase of 65,000 nonfarm jobs, with the unemployment rate holding at 4.2%, according to Reuters. The data matter to markets as investors assess how the economic outlook affects interest rate expectations. Reuters reported that interest rate traders pushed back their expectations for the Federal Reserve’s next rate hike to March. That puts the jobs report among the key near-term catalysts markets will watch after the selloff.