US stocks fell sharply on Thursday, with the Nasdaq Composite entering correction territory. Fears about AI-related sectors after the midterm elections weighed on the market. Nvidia and chip stocks dropped, and Asian markets, including the Kospi and Nikkei, also fell.
On Thursday the Nasdaq Composite dropped 5.5 per cent, entering correction territory, while the S&P 500 slid 4.3 per cent and the Dow fell more than 1,833 points (3.44 per cent). It was the worst day for all three indexes since April 2025. The Nasdaq 100 dropped 6.4 per cent overnight, wiping $2.3 trillion in value, in its worst trading session since March 2020. All 11 S&P 500 sectors ended lower.
Midterm fears and AI spending
Midterm election results weighed on US stocks over fears about the effect on AI-related sectors. The selloff was largely triggered by AI-related stocks amid fears of a moratorium on new AI and technology data centres following Democratic gains over Republicans. Investors worry that Democratic control of Congress will delay the AI buildout and bring greater oversight and regulation of data centre construction. Dr. V K Vijayakumar of Geojit Investments said the rout was triggered by concerns of a big slowdown in data centre spending because the Democrats are opposed to massive data centre investment.
Chip stocks fall sharply
Nvidia fell about 9.3% and was the biggest drag on the S&P 500, and the stock is down 2.6% for the year. The Philadelphia Semiconductor Index plunged 12.2 per cent overnight, and Samsung Electronics, SK Hynix and TSMC came under heavy selling pressure. Semiconductor heavyweights faced intense pressure amid concerns that tighter US AI regulation and a potential slowdown in AI infrastructure spending could hurt future growth and valuations.
Asian markets
South Korea's Kospi plunged more than 8 per cent, triggering a circuit breaker. The index briefly fell that far, and trading was halted for 20 minutes. Japan's Nikkei 225 fell around 6 per cent, while the Nikkei declined 5.7 per cent.
Indian market commentary
The Sensex rose 2.6% on Thursday while the Smallcap 100 index gained only 0.67%. Vijayakumar said foreign institutional investors had bought equities worth ₹35,781 crore in the past five trading sessions. He added that domestic institutional investors have continued to sell and book profits.
