Wall Street Faces Major Sell-Off Amid AI Stock Declines

A major sell-off impacted Wall Street, primarily driven by stocks associated with the expansion of AI data centers. The S&P 500 dropped 4.4 percent, marking its worst decline since April 2025, while the Dow Jones Industrial Average fell over 1800 points and the Nasdaq composite decreased by 5.5 percent. Concerns about potential moratoriums on data center construction following Democratic victories in the recent midterm elections contributed to the downturn.

The Australian sharemarket is expected to experience more muted losses, with futures indicating a drop of 49 points, or 0.5 percent, at the open. The ASX had previously risen 2.6 percent, buoyed by optimism surrounding the midterm results and the potential for an end to the Iran war, which had a positive effect on oil prices.

The decline in AI stocks was widespread, with Nvidia falling 9.3 percent and Advanced Micro Devices dropping 17.3 percent. Other companies like CoreWeave and GE Vernova also saw significant losses. The widespread sell-off overshadowed some positive performances, such as AppLovin, which reported better-than-expected revenue and profit, leading to a 31 percent increase in its stock price.

In global markets, South Korea's Kospi index fell 5.3 percent, and Japan's Nikkei 225 decreased by 1.8 percent, reflecting similar trends in tech and AI-related stocks. Meanwhile, Brent crude oil prices rose 2.6 percent to $97.11, recovering some losses from the previous day. Treasury yields eased, with the 10-year Treasury yield dropping to 4.83 percent, indicating a potential shift towards safer investments as investors reacted to the election results and ongoing economic conditions.