The Nasdaq Composite tumbled 3.3% on Thursday, marking a sharp reversal as investors pivoted away from high-growth technology names and toward more defensive market sectors. This decline pushed the tech-heavy index into correction territory, effectively erasing the gains recorded during the previous trading session.
The retreat was broad, with the S&P 500 falling 2.4% and the Dow Jones Industrial Average shedding 701 points, or 1.3%. While sectors such as healthcare, consumer staples, and utilities managed to hold their ground, the losses in tech and chip-related equities proved too significant for the broader market to overcome. The Dow’s performance on Thursday wiped out nearly half of the gains from its massive rally on Wednesday, which had seen the index jump more than 1,500 points—its best daily performance since April 2025.
Tech Stocks and AI Infrastructure Face Regulatory Uncertainty
The sell-off was particularly acute for companies tied to artificial intelligence and data center infrastructure. Market sentiment shifted as investors weighed the potential policy implications of recent midterm election results, which saw Democrats secure comfortable majorities in both the House of Representatives and the Senate. There is growing concern that this legislative makeup could lead to increased federal regulation of the burgeoning AI industry.
Chipmakers felt the brunt of the pressure, with Nvidia and Broadcom each dropping 5% during Thursday’s session. Software provider Oracle also saw its shares decline by nearly 5%. The downward trend extended to the neocloud sector, where companies like Nebius fell 13%, Iren dropped 11%, and CoreWeave retreated 9%. Tesla and SpaceX shares fell 9% and 7%, respectively, as investors reevaluated their positions in high-valuation growth stocks.
Qualcomm reported quarterly earnings that exceeded analyst estimates, yet the company’s stock still dropped 9% following a weaker-than-expected earnings outlook.
Portfolio Manager Links Market Volatility to New Political Reality
Jordan Watson, a portfolio manager at Tandem Investment Advisors, suggested that the current market volatility reflects a necessary, if painful, digestion of the new political reality. He noted that the rotation out of AI-linked names may change how capital is allocated toward technology infrastructure.
“We may be headed for more volatility as investors digest the election results and potential policy implications,” Watson said. “I wouldn’t view [Wednesday’s equity trading] as an all-clear signal, but rather a call for some sanity around the amount of capital being poured into the AI infrastructure build-out and whether those investments will generate the returns investors expect.”
Energy Markets Reverse Course
While equity markets struggled, the energy sector saw a turnaround. U.S. crude oil prices, which had slipped below $90 per barrel on Wednesday amid speculation that the new congressional majority might pressure the Trump administration to seek an end to the war in Iran, reversed course on Thursday. West Texas Intermediate (WTI) futures climbed more than 1%, trading just below $90 a barrel. Simultaneously, Brent crude futures rose more than 2% to reach approximately $97 a barrel.
