The Nasdaq Composite plunged 5.52% Thursday and entered a correction as a broad retreat from artificial-intelligence investments erased the previous day’s market rally. The S&P 500 fell 4.36%, while the Dow Jones Industrial Average lost 1,833.06 points, or 3.44%, according to closing figures reported by Reuters and the Associated Press.
The Nasdaq closed at 24,315, more than 10% below its October 6 record, meeting the conventional definition of a correction. The S&P 500 finished at 7,353.73 and the Dow at 51,523.06. Reuters estimated that the selloff removed about $3 trillion from the market value of S&P 500 companies. Trading was unusually heavy, with 26.9 billion shares changing hands on U.S. exchanges compared with a 20-session average of 17.7 billion.
The reversal was especially sharp because it followed Wednesday’s 1,500-point rally, when investors initially welcomed the resolution of midterm-election uncertainty. Thursday’s decline more than erased that gain. It was the Nasdaq’s biggest one-day percentage loss in 19 months and the S&P 500’s worst session since the market shock that followed President Donald Trump’s April 2025 tariff announcement.
AI infrastructure trade breaks lower
Semiconductor and data-center stocks led the decline. Nvidia fell more than 9%, the Philadelphia Semiconductor Index dropped more than 12%, and Qualcomm lost 9.5% after its smartphone-chip sales forecast missed Wall Street expectations. Data-center operators IREN and Applied Digital fell more than 14%, while CoreWeave dropped almost 10%. Meta declined 4%, and Amazon and Alphabet each lost 2.2%, according to the closing report.
Investors were reassessing whether the incoming Democratic Congress and newly elected governors could slow data-center construction or impose tighter AI rules. That concern was a market interpretation, not a newly enacted policy: no federal moratorium or comprehensive AI law caused Thursday’s decline. The AP account said worries about possible data-center moratoriums pressured AI stocks worldwide, while Reuters noted that divided government could also limit the scope of legislative change.
The breadth and speed of the selling suggest investors were repricing an expensive, crowded trade rather than responding to one corporate failure. AI-related utilities and equipment suppliers also declined, extending losses beyond chipmakers. Even after Thursday’s fall, however, the S&P 500 remained up 7.4% for 2026 and the Nasdaq was up 4.6%, leaving the correction as a significant reset rather than evidence by itself of a recession.
Rates and Friday’s jobs report move next
Interest-rate risk added pressure. Cleveland Federal Reserve President Beth Hammack said monetary policy would need to become restrictive to return inflation to 2%, according to her prepared remarks. The Federal Open Market Committee held its target range at 3.75% to 4% last week, but Hammack and Fed Governor Lisa Cook dissented in favor of a quarter-point increase, the Fed statement shows.
Thursday’s economic data were not uniformly negative. Nonfarm business productivity increased at a 3.6% annual rate in the third quarter, while unit labor costs fell 0.7%, according to the BLS release. Those figures normally support the case for economic growth without equivalent cost pressure, but they were not enough to offset the technology-sector repricing and concern about further rate increases.
The next immediate test is the October employment report, scheduled for 8:30 a.m. Eastern Friday on the government’s release calendar. A stronger-than-expected jobs number could reinforce expectations for another rate increase, while a weaker report could intensify concern that the selloff is spreading beyond valuation and policy risk. For now, the confirmed development is a rapid correction concentrated in AI-linked assets, with unusually heavy volume and losses broad enough to pull every major U.S. index sharply lower.
