In brief
A wave of selling in artificial‑intelligence and semiconductor stocks rattled New York’s major indexes on Thursday. The Dow fell 3.4%, the S&P 500 4.4% and the Nasdaq 5.5%, with the VIX spiking to its highest level since March. Analysts warned that the disruption could be tied to possible regulatory tightening after Democrats won control of the midterm elections.
U.S. stocks plunged Thursday in New York after a massive sell‑off in semiconductor and artificial‑intelligence shares triggered a rout in technology stocks, sending all three major indexes down for the steepest daily decline in months.
The Dow Jones Industrial Average dropped 1,833.06 points, or 3.4 percent, to 51,523.06, the S&P 500 fell 334.89 points, or 4.4 percent, to 7,353.73, and the Nasdaq Composite tumbled 1,421.52 points, or 5.5 percent, to 24,315.
All 11 core sectors of the S&P 500 finished lower, led by information technology, then consumer discretionary and industrials. Semiconductor stocks suffered the heaviest losses, as concerns grew that the Democratic victory in the mid‑term elections could trigger tighter restrictions on data‑center construction and slow the expansion of AI infrastructure.
Jay Hatfield, chief executive of Infrastructure Capital Advisors, called the behavior a "true panic".
"This is a true panic. This is 100 percent about the chip stocks and the potential slowdown in the AI trade," said Jay Hatfield.
President Donald Trump blamed Democrats for the market decline, describing the sell‑off as "one of the worst days in history based on the results of the election" and lamenting that it was a "sad thing to watch" in a social media post.
The Cboe Volatility Index, known as Wall Street's "fear gauge," surged 69.66 percent to close at 28.18, its highest level since late March, signaling a sharp deterioration in investor sentiment.
Data from the PHLX SOX Semiconductor sector index showed a 12 percent slide, the largest one‑day drop since a 16 percent rout on March 16, 2020, according to the Wall Street Journal. The decline spread beyond semiconductors, with major technology companies tied to AI data‑center projects reporting sharp gains in the negative.
BBC Business noted that investors reacted to the rumor of tougher scrutiny of data‑center construction and the broader AI industry, amplifying fears of an AI slowdown that could dampen growth expectations for the sector.
With the market still reeling from political uncertainty and looming regulatory changes, analysts warn that restoring confidence could take time, as the shift in the economic outlook affects both current valuations and future earnings expectations.
