Stock markets down today: Dow Jones plunges 1,753 points, S&P 500 drops 4% and Nasdaq enters correction - why Wall Street reversed its post-election rally

Stock markets down today: Wall Street's post-election optimism lasted barely a day. US stocks tumbled on Thursday as investors rushed out of technology shares, fearing that Democratic victories in the midterm elections could put the brakes on the massive data-center expansion driving the artificial intelligence trade.

Dow Jones, S&P 500 and Nasdaq Composite Fell Today

Nasdaq Composite sank 5.1% to 24,449.947, moving more than 10% below its record high from last month and entering correction territory. The S&P 500 fell 4%, the Dow Jones Industrial Average shed 1,753 points, or 3.3%, giving back almost all of Wednesday's postelection gains, as per a CNBC report.

The sell-off also pushed the small-cap Russell 2000 down 4.4% putting it in correction territory.

Stock Markets Down Today: Nasdaq Enters Correction as AI Stocks Face Fresh Selling

The technology-heavy Nasdaq bore the brunt of Thursday's decline as investors reconsidered the outlook for AI infrastructure spending.

Nvidia and Broadcom each lost 8%, while Oracle fell 7%. Qualcomm shares plunged 10% despite the company reporting earnings above estimates, as its weaker-than-expected earnings outlook disappointed investors.

The pressure extended across the semiconductor industry. AMD and Micron dropped around 15% each, while Arm declined about 12%. Astera Labs and MACOM Technology Solutions suffered even steeper losses, falling roughly 17% and 18%, respectively.

The iShares Semiconductor ETF (SOXX) fell close to 11% in one update, putting it on track for its worst session since March 2020.

US Stock Market Today: Democratic Election Wins Put Data Center Expansion in Focus

The latest losses came as investors assessed whether Democratic control of both chambers of Congress could lead to greater scrutiny of AI infrastructure projects.

Sen Bernie Sanders of Vermont, who caucuses with Democrats, has called for a national moratorium on data centers. He criticized Big Tech companies in X post on Wednesday, saying, “Americans don’t want Big Tech oligarchs wrecking the environment, gutting jobs and threatening humanity’s future.”

Data-center operators also faced heavy selling. CoreWeave dropped 11%, while Nebius and IREN fell 16% each.

Tim Holland, chief investment officer at Orion, said investors are “stepping away until they get a better sense of the implications of the midterms around the AI capex cycle in particular, which is the biggest economic tailwind we’ve had going for us for the last, call it, three years,” as quoted by CNBC report.

Dow Jones Today Gives Back Nearly All Its Post-Election Gains

The damage spread well beyond technology stocks as the selling intensified.

Caterpillar shares fell 5%, JPMorgan declined 4%, Boeing and Nike each lost 3%. All 11 S&P 500 sectors were trading lower in the afternoon. With information technology recording the steepest decline.

The Cboe Volatility Index, also known as Wall Street's fear gauge, briefly reached 28.09, its highest level since March 31.

Keith Lerner, chief investment officer at Truist Wealth, told CNBC that “Unlike yesterday, you’re just seeing that the sell-off in tech, the size of it, is now feeding itself into the broader market,” adding, “The rubber band is becoming increasingly stretched.”

Thursday's retreat was a sharp reversal from Wednesday, when the Dow surged more than 1,500 points after Democrats secured victories in both chambers of Congress. Even the S&P 500 and Nasdaq Composite also gained more than 1% during that session.