Wall Street's post-midterm rally unraveled Thursday as a renewed rout in artificial-intelligence stocks sent the S&P 500 toward its worst day since April 2025 and erased about $2.2 trillion from its market value. Wall Street's fear gauge jumped nearly 39%, while Treasuries and gold drew haven demand.
The catalyst came from Washington, and from the chip supply chain.
Investors kept unwinding AI trades on bets that the Democratic sweep of Congress will slow data center expansion, while China's delay in approving imports of Nvidia's H200 chips and a soft profit outlook from Qualcomm added pressure. "Nvidia tough. Obviously, the neo-cloud's tough," Jessica Lessin, founder and CEO of The Information, said in an interview with CNBC.
The CBOE Volatility Index surged 38.6% to 23.02, its highest level since April and its sharpest one-day jump since June.
The S&P 500 fell 3.1% to 7,449, down 239 points.
The Dow Jones Industrial Average lost 1,241 points, or 2.3%, to 52,115. NVIDIA Corp. (NVDA) led the blue-chip index lower with a 7% drop, erasing its gains for the year. The decline erased about $337 billion from Nvidia's market value.
The Nasdaq 100 slid 4.5% to 27,169. Within the Magnificent Seven, Tesla Inc. (TSLA) tumbled 10.2%, extending its post-election slide as investors unwound the so-called Trump trade. The Russell 2000 dropped 3.4% to 2,759.
Bonds rallied as investors sought safety.
The 10-year Treasury yield fell 5 basis points to 4.84%. The 2-year yield dropped 8 basis points to 4.50%, and the 30-year yield slipped 3 basis points to 5.25%.
Gold rose 1.3% to $4,126 an ounce and silver edged up 0.6% to $52.61. Bitcoin (BTC) fell 4.8% to $76,509. West Texas Intermediate crude climbed 2.2% to $90.03 a barrel, and Brent gained 2.3% to $96.76.
On the data front, initial jobless claims fell to 189,000 last week from 195,000, below the 196,000 forecast. Nonfarm productivity grew at a 3.6% pace in the third quarter, above the 2.8% estimate, while unit labor costs fell 0.7% against expectations for a 0.6% rise.
Thursday's Performance In Major US Indices
According to market data:
- The Vanguard S&P 500 ETF (VOO) fell 3.1%.
- The SPDR Dow Jones Industrial Average ETF Trust (DIA) declined 2.5%.
- The Invesco QQQ Trust (QQQ) sank 4.9%.
- The iShares Russell 2000 ETF (IWM) lost 3.4%.
Chipmakers Lead The Tech Rout As Staples Hold Up
Technology took the hardest hit as investors dumped AI hardware. The Technology Select Sector SPDR Fund (XLK) fell 6.1%, while the VanEck Semiconductor ETF (SMH) sank 8.6%.
Advanced Micro Devices Inc. (AMD) dropped 13.8% and Micron Technology Inc. (MU) lost 12.3%. Qualcomm Inc. (QCOM) slid 11.2% after guiding fiscal first-quarter adjusted EPS to $2.15-$2.35, a midpoint below the $2.29 consensus, as fourth-quarter handset revenue fell 26%.
Consumer staples held up best. The Consumer Staples Select Sector SPDR Fund (XLP) slipped just 0.2% as investors rotated into defensive shares, while the Energy Select Sector SPDR Fund (XLE) dipped only 0.4% with crude higher.
All 11 sectors traded lower, with Consumer Discretionary down 3.8%, Industrials 2.8%, Materials 2.5%, Financials 2.1%, Real Estate 1.6%, Health Care 1.1%, and Communication Services and Utilities each 0.6%. About 417 of the S&P 500's 503 members were in the red.
Among Russell 1000 gainers, AppLovin Corp. (APP) soared 29.6% after a third-quarter beat on revenue and earnings and a strong outlook, and Piper Sandler lifted its price target to $355. EPAM Systems Inc. (EPAM) jumped 18.1% on better-than-expected results, a raised 2026 outlook and a $1.5 billion boost to its buyback authorization.
Unity Software Inc. (U) rallied 13.8% after guiding fourth-quarter sales to $688 million-$696 million, well above the $603.6 million estimate. Liberty Media Corp. (FWONA) gained 10.5% after announcing a share swap with entities related to John Malone that reduces his voting concentration, alongside third-quarter results. Corpay Inc. (CPAY) rose 8.2% after beating estimates and raising its 2026 guidance, with Keefe, Bruyette & Woods lifting its target to $525 from $470.
On the downside, Dutch Bros Inc. (BROS) plunged 20.9% after narrowing its 2026 sales guidance below estimates, prompting price-target cuts from Wells Fargo and KeyBanc. Caris Life Sciences Inc. (CAI) fell 20.1% after its third-quarter report, even as it raised its 2026 sales outlook to $1.04 billion-$1.05 billion.
AI hardware names extended their slide. Applied Optoelectronics Inc. (AAOI) sank 17.7% and Astera Labs Inc. (ALAB) lost 16.7%, deepening a post-earnings decline that led UBS and TD Cowen to cut their targets. SanDisk Corp. (SNDK) slumped 16.5% alongside Micron, pushing its relative strength index to its most oversold level since April 2025.
Looking Ahead
After the close, Microchip Technology is expected to report EPS of 84 cents; Cloudflare, 34 cents and Affirm, 38 cents, while EOG Resources is seen at $4.47 and Live Nation at $1.51.
Thursday's Russell 1000 Top Gainers
Thursday's Russell 1000 Top Losers
