Nasdaq heads for worst day in 18 months as tech sell-off spreads
Chip stocks led a Wall Street rout as investors bet the Democrats' midterm wins will slow the datacentre building behind the AI boom.
New York — The Nasdaq slumped by up to 5% on Thursday, heading for its worst day in 18 months, as investors bet that the artificial intelligence industry faces tougher regulation after the Democrats' midterm election triumph. The tech-heavy index tumbled into what traders call "correction territory" — more than 10% below its recent record high — the Guardian reported.
Chip stocks led the rout. Memory maker SanDisk fell 19% and hard drive maker Western Digital dropped 16.5%. Nvidia, the chipmaker at the heart of the AI boom, was the biggest faller on the Dow Jones industrial average, down 6.7%, followed by Goldman Sachs at 5.7%. The Dow was down more than 1,500 points, or 2.8%, at 51,868 in early afternoon trading, while the S&P 500 lost 3.7%.
Wall Street's fear index, the VIX, jumped 40% to its highest level since the early weeks of the Iran war. The sell-off reached Europe, where an early rally fizzled; Britain's FTSE 100 closed down 46 points, or 0.4%, at 10,782.66.
Analysts pointed to expectations that Democratic governors will clamp down on new datacentres after the party won control of Congress and a series of governors' races this week; voters also rejected datacentre projects in local ballots. Neil Wilson, an investor strategist at Saxo UK, called it a "complete capitulation-level event", adding that the fear is a "total momentum unwind as Democrats pace the frontier and kibosh datacentre buildout". Ted Parkhill of Incline Investment Management said the market was shifting from the promise of AI to the price of AI, and warned of considerable turmoil ahead.
The fall is a sharp reverse from Wednesday, when Wall Street posted its biggest daily gain in months on hopes that a stronger Democratic party would restrain the White House. That rally prompted Donald Trump to boast on Truth Social that the "Stock Market just hit another Record High", telling followers their retirement savings were "through the roof". Tech analyst Dan Ives warned there was "no way to sugarcoat" that Democratic control, especially of the Senate, would create "major hurdles for AI and tech legislation" over the next two years.
It was the Nasdaq's steepest one-day fall since April last year, when Trump's "liberation day" tariffs shook markets. Traders now wait to see whether the selling steadies — and how far the new Congress will go in reining in the datacentre boom.
Sources
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