Stock Market Selloff: Nasdaq Enters Correction as AI Stocks Plunge

US stocks suffered their heaviest losses in more than a year and a half on Thursday, November 5, 2026, as investors dumped the chip and artificial intelligence shares that had led the market higher. The Nasdaq Composite dropped 5.52% and slid into correction territory, while the Dow Jones Industrial Average lost more than 1,800 points. Coverage from Fox Business and Yahoo Finance pointed mainly to the Democrats’ sweeping wins in the midterm elections, which raised fears of tougher rules for AI and the data centres that power it.

What happened on Wall Street?

All three major US indexes closed sharply lower. The S&P 500 fell 334.89 points, or 4.36%, to finish at 7,353.73. The Dow Jones Industrial Average dropped 1,833.06 points, or 3.44%, to 51,523.06.

The Nasdaq Composite took the worst of it, falling 1,421.52 points, or 5.52%, to roughly 24,315. Fox Business reported that it was the index’s worst session since April 2025, and that it left the Nasdaq more than 10% below its record close on October 6. A drop of that size from a peak is commonly called a correction.

The narrower Nasdaq-100, which holds the largest non-financial companies on the exchange, fell 6.36%. Yahoo Finance reported that the slide wiped about $2.3 trillion off the index’s market value in a single day.

Which stocks fell the most?

Semiconductor makers were hit hardest. The Philadelphia Semiconductor Index, a widely followed basket of chip stocks, fell 12.25% to 9,011.14, according to Yahoo Finance.

Nvidia, the most valuable chip company and a bellwether for AI spending, closed down 9.26% at $181.60, Fox Business reported. Yahoo Finance said Micron was down around 12% at one point during the session and AMD was off about 15% by midday.

The damage spread well beyond chipmakers. Fox Business listed Tesla down 10.77% and SpaceX down 9.05%. Companies tied to AI data-centre capacity, including IREN, Applied Digital and Nebius, each fell more than 14%. Meta Platforms declined 3.96%.

Why did investors sell?

Both outlets attributed the move mainly to the results of the midterm elections, in which Democrats won by wide margins. Investors were worried that a shift in political power could bring more regulation of artificial intelligence. They also worried about a slower and more expensive build-out of data centres.

Data centres have become a political issue partly because of rising electricity prices, Yahoo Finance noted. Any policy that raises costs or delays new capacity would hit the companies whose shares have climbed most on the AI boom.

Thursday’s fall also erased a rally from the day before, when stocks had risen after the election. Yahoo Finance added that some investors appeared to be locking in profits on strong gains made earlier in 2026.

Jakub Rochlitz of eToro told Fox Business that markets were “pricing in the midterm results.” Nomura strategist Charlie McElligott described the selling of market leaders to Yahoo Finance in blunter terms: “They’re shooting the generals.”

Why it matters

The AI trade has carried a large share of the stock market’s gains. When the biggest technology and chip companies fall together, the major indexes move sharply because those firms make up such a big part of their value.

A correction in the Nasdaq does not mean a bear market, which is usually defined as a 20% fall from a peak. But a single-day loss of this size shows how sensitive investors have become to anything that could slow AI spending. That includes politics, power costs and regulation, not just company results.

Earnings also played a part for some names. Qualcomm, for example, was under pressure after reporting a 26% fall in handset chip revenue in its latest quarter.

What happens next?

Investors will be watching how quickly the new political picture turns into actual policy on AI and energy. That will take time, since newly elected lawmakers do not take their seats immediately.

In the near term, more company results and economic data will test whether Thursday’s fall was a one-day shock or the start of a longer pullback. Investors will also look for signs of whether big technology companies plan to keep spending heavily on AI infrastructure.