AI-related stocks plunge as S&P 500 falls 4.4% following midterm elections
Wall Street saw a sharp decline on Thursday, led by AI data-center stocks, after Democratic victories in the U.S. midterm elections raised concerns about possible regulatory pauses.
Wall Street experienced a steep sell-off on Thursday, with the S&P 500 dropping 4.4% – its worst single-day decline since President Donald Trump’s "Liberation Day" tariffs in April 2025. The Dow Jones Industrial Average fell 1,833 points (3.4%) and the Nasdaq composite lost 5.5%, pulling the index 11.9% below its recent all-time high.
Shares of companies tied to the expansion of AI data centres led the losses. Nvidia, the chip maker most associated with the AI boom, slid 9.3%, making it the largest drag on the S&P 500. Advanced Micro Devices fell 17.3%, CoreWeave dropped 9.8%, and GE Vernova declined 7.5%. Analysts noted that a 1% move in Nvidia has a greater impact on the S&P 500 than a similar move in most other U.S. stocks.
The downturn coincided with the U.S. midterm elections, in which Democrats won nationwide victories. The results have heightened expectations that policymakers may consider pausing new AI data-center construction, amid public concerns about rising power costs.
A few stocks rose despite the broader weakness. AppLovin jumped 31% after reporting revenue and profit above analysts’ expectations and announcing a share-buyback program worth up to $3.2 billion. Tapestry, the parent of Coach and Kate Spade, climbed 7.1% on stronger-than-expected earnings and an upgraded revenue outlook.
In other markets, Brent crude oil rose 3.9% to $98.29 a barrel, partially recovering from a prior decline, while 10-year Treasury yields slipped to 4.84% from 4.90%, suggesting a shift toward safer assets. The Bank of England raised its main interest rate for the first time in three years, and Governor Andrew Bailey said, ">We’ve seen encouraging news in the past 48 hours. The best thing that can happen is to resolve the conflict in the Middle East; there’s no question about it."
Overall, the S&P 500 closed at 7,353.73, the Dow at 51,523.06 and the Nasdaq at 24,315.00, marking a broad correction after several months of gains driven by AI-related enthusiasm.