Stock Markets Plunge as Dow Sheds 1,833 Points and Nasdaq Enters Correction Territory in AI Sell-off

US stock markets suffered their worst session in more than a year on Thursday, 5 November, as AI and semiconductor shares led a sell-off that sent the Dow Jones Industrial Average down 1,833 points and pushed the Nasdaq Composite into correction territory. The losses erased Wednesday's rally amid concerns over AI investment returns and data-centre spending as investors reassessed market risks. The retreat showed how quickly confidence can shift when expensive technology shares face questions about financing, future demand and the time needed to turn infrastructure commitments into eventual sustainable profits.

Wall Street Loses Trillions as Nasdaq Enters Correction

The Dow closed 3.44% lower at 51,523.06, while the S&P 500 fell 4.36% to 7,353.73. The Nasdaq dropped 5.52% to 24,315, leaving it about 12% below its October record. The Russell 2000 fell 4.45%. A correction means a fall of at least 10% from a recent peak.

Reuters reported that about $3 trillion (£2.23 trillion) was wiped from S&P 500 companies' market value. The Magnificent Seven technology companies were among the biggest contributors to the decline. These declines represent changes in market capitalisation, not cash withdrawals from company accounts.

The Nasdaq fell below its 200-day moving average for the first time since April. All 11 S&P 500 sectors closed lower.

Election Results Intensify Existing AI Concerns

Reuters quoted Fuchs Capital Partners' Mark Fuchs saying AI shares had been repricing lower for more than a month because of valuation, free cash flow and borrowing-cost concerns. The US election results intensified existing worries about the pace of data-centre construction.

Investors questioned whether data-centre, chip and computing spending can generate sustainable revenue and profits. Democratic victories raised concerns about scrutiny of data-centre permits, electricity demand and environmental effects. Senator Bernie Sanders has proposed a national data-centre moratorium, but it has not become policy.

AMP economist Shane Oliver said the decline could remain a correction if the wider economy held up. Saxo strategist Charu Chanana cautioned that scrutiny of infrastructure expansion did not mean the end of the AI boom or US ambitions to lead the technology race.

Semiconductor Shares Suffer Historic Losses

The iShares Semiconductor ETF (SOXX) fell about 12%, its worst session since March 2020. The Philadelphia Semiconductor Index also fell about 12%, its steepest daily decline since April 2025. Advanced Micro Devices (AMD) and Micron Technology each dropped more than 17%, SanDisk plunged about 22%, and Nvidia fell 9.3%.

The losses reflected fears that slower data-centre investment could weaken chip demand. Micron supplies memory components, while Nvidia and AMD provide AI computing hardware. Qualcomm fell about 9% after missing analysts' fourth-quarter smartphone chip sales estimates amid sluggish demand.

Volatility Spreads From Wall Street to Asia

The Cboe Volatility Index (VIX) reached 28.09, signalling increased demand for protection against market swings. Reuters said the VIX recorded its biggest intraday jump in more than 18 months, highlighting the rapid repricing across technology shares and wider markets. Chanana warned that investors unwinding crowded positions could intensify selling, particularly where leverage and forced liquidations were involved.

Selling continued in Asia on Friday. South Korea's KOSPI plunged more than 8% intraday, triggering a 20-minute trading halt, before recovering to close down 3.9%. Samsung Electronics and SK hynix also suffered sharp losses. Japan's Nikkei fell more than 6%, as AI spending concerns spread beyond Wall Street.