Dow Down More Than 1,700 Points and S&P 500 Off 4% as AI Selloff Erases Post-Election Rally

Since Wednesday's post-midterm rally lifted the Dow more than 1,500 points, its best day since April 2025, the AI selloff has gone from a tech problem to a market-wide one. By about 3:36 p.m. ET Thursday, Nov. 5, the Dow Jones Industrial Average stood at 51,612.74, down 1,743 points, or 3.3%.

The damage was larger by other measures. The S&P 500 was down roughly 4.1% to 4.3% during the afternoon, heading for its worst day since April 2025. The Nasdaq Composite fell 5.2% to 5.4%, trading more than 10% below its October record and on track to close in correction territory. The small-cap Russell 2000 also slid into a correction.

Markets are still open, so those figures are moving.

Chips take the worst of it

The PHLX Semiconductor index was down about 10%. The iShares Semiconductor ETF (SOXX) fell more than 10%, which would be its worst day since March 2020, according to CNBC's market data.

Nvidia and Broadcom each dropped about 9%. Oracle fell 7% to 9%, depending on the time of day. Qualcomm lost 10% to 13% even though it beat earnings estimates, because its outlook came in weaker than expected. Revenue from its smartphone-chip business fell 26% to $5.14 billion, below Wall Street's expectations.

The companies that rent out AI computing capacity fared worse. CoreWeave dropped 11% to 14%. Nebius fell 16% to 17%. Iren fell 16% to 19%.

The selling also reached the rest of the market. Caterpillar fell 5%, JPMorgan 4%, and Boeing and Nike 3% each. Only a few defensive sectors held up. Energy and consumer staples edged higher, according to sector figures from Breitbart.

Two explanations on the table

The most common explanation ties the slide to the election. Democrats won big at the federal and state level, and investors fear that could slow the data center buildout. Sen. Bernie Sanders, who caucuses with Democrats, has called for a national data center moratorium. On X Wednesday evening he wrote that "Americans don't want Big Tech oligarchs wrecking the environment, gutting jobs and threatening humanity's future."

Tim Holland, chief investment officer at Orion, said investors are "stepping away until they get a better sense of the implications of the midterms around the AI capex cycle in particular, which is the biggest economic tailwind we've had going for us for the last, call it, three years." He added: "It's about tone and tenor from the party that did really well."

Chris Zaccarelli, chief investment officer at Northlight Asset Management, said the market narrative has shifted from "AI changes everything" to "Blue wave means data centers will never be built again in this country."

Peter Schiff of Euro Pacific Asset Management said on X that Wednesday's rally "made no sense" and that Thursday's selloff "makes perfect sense. Expect more days like today."

Nomura cross-asset strategist Charlie McElligott gave a different reason. He said the primary catalyst is not a sudden deterioration in fundamentals but a rush by hedge funds to lock in profits before year-end. "They're shooting the generals," he wrote, adding that the unwinding of this year's popular thematic stocks has been "wildly acute" for more than a month. He called single-stock moves "absolutely BONKERS."

The two explanations are not mutually exclusive, and no source quantifies how much each contributes.

Keith Lerner, chief investment officer at Truist Wealth, described the broadening. "The sell-off in tech, the size of it, is now feeding itself into the broader market," he said. "The rubber band is becoming increasingly stretched."

Context for the drop

The Nasdaq is still up about 5% for the year, according to Epoch Times market data. The selloff also comes during a third-quarter earnings season in which a majority of reporting S&P 500 companies have beaten expectations.

Neocloud stocks were under pressure before the election. They have fallen in recent weeks over concerns that these companies will struggle to borrow money for their infrastructure buildout. Epoch Times also reports several major tech stocks are now in a bear market, down at least 20% from recent peaks.

Outside tech, oil rose. Brent traded around $97 a barrel and WTI around $90 on uncertainty over whether President Trump will pursue a deal with Iran to end the war in the Middle East. Vice President JD Vance wrote on X that "The reason we lost [the midterm elections] is the war," and suggested the party push for a resolution.

What comes next

The Challenger, Gray & Christmas report showed October layoff plans fell to the lowest level since 2023. That sets up Friday's key employment report as the next major data point. Economists are penciling in a gain of 65,000 new jobs and an unemployment rate of 4.2%. Airbnb, Duke Energy and Lumentum report earnings Thursday.

Investors will watch whether Thursday's close confirms the Nasdaq correction and whether Democratic leaders put any concrete data center restrictions forward. Sanders's moratorium call is so far a statement, not legislation that has advanced.