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Wall Street's midterm rally lasted less than a day. On Thursday, 5 November 2026, the market reversed sharply: the Nasdaq Composite plunged more than 5% into correction territory, the Dow Jones Industrial Average dropped more than 1,200 points, and the S&P 500 fell more than 3% — wiping out almost all of Wednesday's gains in a single session. The selling was led by the same chip and artificial-intelligence stocks that powered the market's rise, and it asks whether the AI spending boom is moving faster than the profits behind it? All figures here are intraday readings; the market was still open.
What Happened Today
By late morning, the Nasdaq was down 1,370 points, or 5.32%, at 24,366, according to Yahoo Finance data cited in market reports. That put the index more than 10% below its record close of 27,599.89 on 6 October — the textbook definition of a correction — and Reuters reported it was on track to confirm a correction if it closed there. The Dow was down 1,238 points, or 2.32%, at 52,117, while the S&P 500 had lost 269 points, or 3.5%, to 7,419.
The speed stands out. A day earlier, the Dow had jumped 1,569 points, or 3%, to 53,356 after Democrats swept Congress, with the S&P 500 up 1.6% and the Nasdaq up 1.4%. Thursday's drop gave nearly all of that back before lunch. Chip stocks led the damage: AMD fell about 11%, Qualcomm about 9% after missing fourth-quarter smartphone chip sales estimates, Micron about 7%, Nvidia about 4% and Broadcom about 5%, while the Philadelphia Semiconductor Index fell as much as 7.1% intraday. Tesla lost about 9%.
What Triggered the Selloff
Three forces came together at once. The first is doubt about AI spending itself. Reuters tied the selloff to worries about heavy AI spending and tighter scrutiny of data-centre expansion, with big technology companies borrowing heavily to fund data centres and chips while investors question how quickly that spending turns into profit.
The second is politics. Democrats also made gains in the data-centre states where public opposition to the industry's rapid expansion — over power, water and local disruption — has been growing, and investors are now pricing in closer scrutiny of the AI buildout. That is the same state-level pressure behind the split market we reported on Wednesday, when Wall Street soared but data-centre stocks crashed. The same week, China blocked SoftBank's $5.4 billion robotics deal — another sign of new political limits on the AI buildout. The third force is momentum: chip stocks were already falling on Wednesday, and once the Nasdaq broke lower, selling fed on itself. As NDTV Profit reported, it was a second straight day of heavy selling in semiconductor equities, with profit-booking after the midterm rally layered on top.
Why This Is Different From a Normal Dip
A 5% one-day fall in the Nasdaq is not routine, and the breadth matters more than any single number. This was not one company missing earnings: it was the whole AI supply chain — chips, data centres, cloud software and the carmaker most associated with the trade — falling together, for the second day running. The only counter-signal was the labour market: initial jobless claims fell to 189,000 last week, the fewest since mid-July.
A 10% fall from a peak is a normal feature of bull markets, not a crash in the historic sense — but corrections test which stories investors believe, and the AI buildout story had survived every test of 2026 until this week.
What to Watch Next
The first test comes at the close: if the Nasdaq finishes more than 10% below its October record, the correction is confirmed; Friday's October jobs report is the next data point. The second test is whether the selling spreads beyond technology. Wednesday's rally said the election result was good for markets; Thursday's selloff said the AI boom is being re-priced. One verdict will turn out wrong, and the next few sessions will show which.