Wall Street suffered a sharp reversal on Thursday as investors abandoned stocks tied to the artificial intelligence data center buildout. The S&P 500 fell 3.2 per cent, putting the index on track for its worst single-day performance since April 2025, when markets reacted to the announcement of “Liberation Day” tariffs, BNN Bloomberg reported.
The selling pressure intensified throughout the morning, dragging the Nasdaq composite down by 5 per cent. According to CNBC, this decline pushed the tech-heavy index into correction territory, trading more than 10 per cent below its record high set in early October. The Dow Jones Industrial Average shed 1,146 points, or 2.1 per cent, as of 11 a.m. Eastern time.
Midterm Election Results Fuel Policy Uncertainty
Market volatility follows the U.S. midterm elections, where Democratic victories across the country have raised concerns about potential government-mandated pauses in data center construction. Investors are weighing the possibility of stricter oversight on the infrastructure required to power the AI boom.
CNBC reported that Vermont Senator Bernie Sanders has already called for a national moratorium on new data centers, writing in a post on X Wednesday evening that “Americans don’t want Big Tech oligarchs wrecking the environment, gutting jobs and threatening humanity’s future.” This political shift has created a sense of unease among investors who previously viewed the AI capital expenditure cycle as a primary economic tailwind. Sameer Samana, a senior global market strategist at the Wells Fargo Investment Institute, noted that the market had priced in significant growth, and any regulatory or social pushback against data centers creates uncertainty for the sector. “It is one more risk factor that comes and adds to the long list of things that could go wrong with the current pace of AI buildout,” according to analysts.
Chip and Cloud Stocks Face Steepest Drops
The sell-off hit chipmakers and cloud service providers the hardest. Nvidia fell 8.3 per cent, while Advanced Micro Devices saw a 15.9 per cent decline. The iShares Semiconductor ETF dropped 11 per cent at one point, marking its worst performance since the onset of the COVID-19 pandemic in March 2020, according to CNBC. Other companies exposed to the AI supply chain also retreated. CoreWeave, which provides cloud access to high-end chips, fell 14.9 per cent. Reuters reported that other major tech names, including Micron, Dell, and Marvell Technology, also suffered double-digit percentage losses. Broadcom and Oracle each fell 6 per cent. Qualcomm dropped 11 per cent after reporting a weaker-than-expected earnings outlook. “Yesterday was a relief rally, and today’s more about investors being disappointed in Qualcomm earnings and the continuation of the rotation trade away from AI,” said Keith Buchanan, senior portfolio manager at Globalt Investments.
Investor Rotation Toward Treasury Bonds
As money flows out of high-growth tech stocks, investors are seeking refuge in government debt. The yield on the 10-year Treasury fell to 4.84 per cent on Thursday, down from 4.90 per cent late Wednesday.
While the broader market remains under pressure, analysts suggest that the current sell-off reflects an unwinding of the AI-focused trade that dominated market sentiment for much of the year. “Unlike yesterday, you’re just seeing that the sell-off in tech, the size of it, is now feeding itself into the broader market,” said Keith Lerner, chief investment officer at Truist Wealth. Reflecting on the geopolitical climate, one market observer noted, “The best thing that can happen is to resolve the conflict in the Middle East; there’s no question about it.”
Frequently Asked Questions
Why are data center stocks falling after the election?
Investors fear that Democratic gains in the midterms could lead to stricter regulations or construction moratoriums on data centers. These facilities are essential for the AI industry, and any slowdown in their buildout could reduce demand for chips and related infrastructure.
How does this market drop compare to past events?
The current decline in the S&P 500 is the largest since April 2025, when markets reacted to new tariffs. Additionally, the semiconductor sector experienced its sharpest single-day drop since March 2020.
BREAKINGPOCKET WALL STREET’S AI HANGOVER Yesterday, investors celebrated. Today, they’re questioning the bill. MARKET SPECIAL | NOVEMBER 5, 2026 Yesterday, Wall Street threw a party. Today, someone handed investors the bill. And apparently, nobody wants to pay. The US…
Are all technology stocks declining?
No, the sell-off is concentrated in companies tied to the AI data center buildout, though the pressure has spread to industrial and financial stocks such as Caterpillar, Boeing, and JPMorgan.
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