Tech-heavy Nasdaq drops 3.3% as AI stocks fall

Market Plunge

The Nasdaq Composite experienced a significant decline, dropping 3.3% and entering correction territory. This follows a sharp rise on Wednesday, the best day for the Dow in over a year and a half, after the Democrats' decisive victory in the midterm elections.

The S&P 500 and the Dow Jones Industrial Average also fell, with the S&P 500 down 2.4% and the Dow Jones shedding 701 points, or 1.3%.

Investors are now reassessing the market landscape in light of the new Democratic majority in both chambers of Congress, particularly concerning potential regulatory changes for the artificial intelligence sector.

Tech Sector Impact

Tech stocks, especially those related to artificial intelligence, saw a significant downturn. Chipmakers like Broadcom and Nvidia each fell 5%, while software giant Oracle declined nearly 5%. Tesla and SpaceX also experienced a 9% and 7% drop, respectively.

Qualcomm reported earnings that exceeded expectations but still saw its stock fall 9% due to a weaker-than-expected earnings outlook.

Other neocloud companies, including CoreWeave, Nebius, and Iren, also saw their shares retreat, with CoreWeave losing 9%, Nebius 13%, and Iren 11%.

Oil Prices Bounce

Oil prices halted their descent, with Brent crude trading around $97 per barrel and US benchmark WTI at $90 per barrel. This came after a sharp sell-off on Wednesday, as investors anticipated a deal with Iran to end the war in the Middle East.

The Biden administration's comment that the Iran war had played a significant role in the Republican losses added to the market's uncertainty.