Wall Street selloff: Nasdaq sinks 5.5%, S&P 500 sheds $3 trillion on AI curbs fear

US stocks suffered a steep selloff on Thursday as investors dumped AI-linked shares on fears that tighter regulation and local resistance could slow data centre expansion. The S&P 500 shed roughly $3 trillion in market value, while the Nasdaq Composite fell 5.46% to 24,315.02, its biggest one-day drop in 19 months, according to Reuters as cited in the source report.

The S&P 500 lost 4.32% to close at 7,353.65, and the Dow Jones Industrial Average slid 1,842.69 points, or 3.45%, to 51,513.43. The Nasdaq ended more than 10% below its October 6 record, which puts it in correction territory. All three indices posted their worst single-day percentage falls since April 3, 2025, the days after Donald Trump's tariff announcement.

The trigger was Tuesday's midterm elections. Democratic wins, including in states where opposition to new data centres has been building, pushed investors to reconsider how quickly AI infrastructure can be built. Melissa Brown of SimCorp said investors seem to be recognising that some newly elected lawmakers and governors want to slow that pace.

Chipmakers took the brunt. Western Digital, Micron, AMD and Seagate each fell more than 15% among S&P 500 names, and the Philadelphia semiconductor index had its biggest daily percentage fall since March 2020. Data centre operators, neocloud firms such as CoreWeave and Nebius, and power suppliers like GE Vernova and Constellation Energy also dropped. Qualcomm slid after missing estimates for smartphone chip sales. Small caps were not spared, with the Russell 2000 down 4.4%.

There was some context for calm. The rout came a day after the S&P 500's best daily gain in three months, and Argent Capital's Jed Ellerbroek called it a possible capitulation phase for data centre spending plays, though he felt the moves looked overdone. Some analysts also think a divided Washington may limit sweeping legislative change.

For Indian readers, the takeaway is that global tech sentiment is jittery, and IT and electronics-linked stocks may feel it at the open. Traders will now watch upcoming jobs and economic data for signals on Federal Reserve policy, with some Fed officials favouring gradual rate hikes while inflation stays high.

Read the original report: Economic Times.

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