Nasdaq sees worst day in 18 months as investors bet on AI slowdown after Democrats’ election triumph
Top line
Nasdaq suffers its worst day in 18 months, plunging 5.5% as investors fear stricter AI datacenter regulations following Democratic midterm election wins.
Summary
The Nasdaq experienced its worst day in 18 months, plunging 5.5% and wiping over $2 trillion in value as investors panicked over potential regulatory crackdowns on artificial intelligence datacentres following Democratic successes in the US midterm elections. The widespread sell-off affected major tech stocks like Nvidia, SanDisk, and Western Digital, while Wall Street's VIX fear index spiked by 61%, reflecting broader market turmoil and a shift toward pricing the real-world costs of AI infrastructure.
Highlights
- The Nasdaq index dropped 5.5% on Thursday, marking its worst single-day performance in 18 months.
- More than $2 trillion was wiped off the Nasdaq's value, pushing the tech-heavy index into 'correction territory'.
- The sell-off was driven by investor concerns over potential stricter regulations and curbs on artificial intelligence datacentres following Democratic victories in the US midterm elections.
- Chip and hardware stocks led the decline, with SanDisk falling 22% and Western Digital dropping 17%.
- Wall Street's 'fear index', the VIX, surged by 61% to its highest level since the early weeks of the Iran war.
- The Dow Jones industrial average fell 3.4% (over 1,800 points) to 51,868 points, and the S&P 500 dropped 4.3%.
- Nvidia shares fell 9.2% and Goldman Sachs dropped 3.7% on the Dow.
- European markets also experienced downward pressure, with Britain's FTSE 100 closing down 0.4%.
- Analysts suggest the market is shifting from the promise of AI to confronting the price and regulatory hurdles of AI expansion.
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