Nov. 5, 2026 — The Nasdaq Composite was on track to confirm a technical correction on Thursday as semiconductor and artificial intelligence stocks plunged, with investors increasingly concerned that tighter regulation could slow the expansion of AI infrastructure following Democrats’ sweeping midterm election victory.
The Nasdaq and S&P 500 were heading toward their steepest one-day declines since the April 2025 “Liberation Day” market selloff. At 11:00 a.m. ET, the Nasdaq Composite had fallen 4.95%, while the S&P 500 was down 3.20%.
Nvidia shares dropped 6.4%, while the Philadelphia SE Semiconductor index plunged nearly 11%, reflecting mounting pressure across the chip industry.
The selloff came one day after Democrats captured both chambers of Congress, including victories in several important data center states. The results raised concerns that political opposition to large-scale AI infrastructure projects could lead to stricter regulation or slower development.
“Investors appear to be recognizing that some newly elected members of Congress and governors are looking to slow the pace of AI infrastructure development,” said Melissa Brown, global head of investment decision research at SimCorp.
She said that while a complete halt to AI infrastructure expansion appeared unlikely, any slowdown could threaten a growth story that has depended heavily on rapid investment in supporting infrastructure.
Nasdaq Nears 10% Correction Threshold
The Nasdaq Composite was approaching the threshold for a technical correction, generally defined as a decline of 10% or more from a recent record high. The index was on track to reach that level after retreating from its October 6 record-high close.
The Nasdaq-100 had already confirmed a correction on Monday. At a decline of around 5.4% on Thursday, the index was set to erase more than $2.2 trillion in market value if losses held.
At 11:00 a.m. ET, the Dow Jones Industrial Average had fallen 1,146.83 points, or 2.15%, to 52,209.29.
The S&P 500 had lost 246.37 points, or 3.20%, to 7,440.29, while the Nasdaq Composite had dropped 1,273.18 points, or 4.95%, to 24,463.34.
The sharp reversal followed Wednesday’s rally, when the benchmark S&P 500 recorded its biggest one-day percentage gain in three months as reduced political uncertainty boosted investor appetite for risk.
Technology Giants and AI Infrastructure Stocks Slide
Major technology companies gave back much of their previous session’s gains.
Meta Platforms fell 5.7%, Amazon.com declined 4.3%, and Alphabet lost 3%.
The downturn extended beyond major technology companies to businesses directly exposed to the expansion of AI infrastructure. Data center operators IREN and Applied Digital, cloud computing companies CoreWeave and Nebius Group, and AI-related equipment and utility suppliers GE Vernova and Constellation Energy all recorded steep losses.
Tesla and SpaceX, both led by Elon Musk, fell more than 10% each, extending their recent declines. Musk had spent nearly half a billion dollars supporting Republican candidates during the midterm election campaign.
Chipmaker Qualcomm dropped 13.5% after its forecast for fourth-quarter smartphone chip sales fell short of Wall Street expectations.
The Philadelphia SE Semiconductor index’s nearly 11% decline underscored the extent of the pressure on companies tied to the AI and chip industries.
Political Uncertainty and AI Spending Concerns
Investors are reassessing the outlook for AI-related companies as political developments raise questions about the pace of new data center construction.
The rapid expansion of AI infrastructure has supported strong market valuations for chipmakers, data center operators, equipment suppliers and major technology companies. A slowdown in investment could affect companies that rely on continued demand for computing capacity and related hardware.
The prospect of divided government in Washington may also limit major legislative changes and make agreement on additional fiscal spending more difficult, particularly as the United States faces a deteriorating fiscal position.
Meanwhile, a sharp decline in oil prices helped support market sentiment, although inflation concerns remain.
Central banks around the world have acknowledged that inflation is still elevated, with crude oil prices having surged amid the Middle East conflict.
Inflation and Interest Rates Add to Market Pressure
Comments from Federal Reserve officials added another concern for investors.
Cleveland Federal Reserve President Beth Hammack and Richmond Fed President Thomas Barkin both indicated on Thursday that further interest rate increases could be possible.
Investors are now focused on the U.S. October nonfarm payrolls report, scheduled for Friday, as they assess the outlook for employment, inflation and monetary policy.
Traders currently expect the Federal Reserve to raise interest rates next month, following its September rate increase.
Higher interest rates can put additional pressure on technology and growth stocks by increasing financing costs and reducing the appeal of future earnings.
Market Breadth Signals Widespread Selling
The decline extended across much of the market.
On the New York Stock Exchange, declining stocks outnumbered advancing issues by a ratio of 2.45 to 1. On the Nasdaq, decliners outnumbered advancers by 3.56 to 1.
The S&P 500 recorded 74 new 52-week highs and six new lows. The Nasdaq Composite registered 140 new highs and 430 new lows.
Seven of the 11 major S&P 500 sectors were trading lower, with technology and consumer discretionary stocks leading the declines. Energy was the strongest-performing sector.
Thursday’s selloff highlights the growing uncertainty surrounding the AI investment boom. Investors are now weighing the possibility of tighter regulation, slower infrastructure expansion, persistent inflation and higher interest rates against the strong growth expectations that previously supported technology valuations.
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