New York: Wall Street witnessed a sharp sell-off on November 5, reversing gains made during a strong post-midterm election rally, as mounting concerns over AI stock valuations, semiconductor demand and potential regulatory hurdles triggered widespread investor anxiety.
The Nasdaq Composite plunged 5.52%, marking its biggest single-day decline in 19 months, while the S&P 500 dropped 4.36% and the Dow Jones Industrial Average declined 3.44%. All three major indices registered their steepest daily losses since April 2025.
The technology-heavy Nasdaq 100 fell 6.36%, recording its worst daily performance since the COVID-19 market crash in 2020.
Semiconductor stocks bore the brunt of the sell-off, with AMD plunging 17.3% and Micron Technology declining 17.5%. Nvidia shares fell 9.3%, marking their biggest decline since January 2025, while Qualcomm lost 9.5% after its outlook for smartphone chip sales disappointed investors.
The downturn also affected companies associated with AI infrastructure, including data centres, computing equipment and related technologies. Investors have poured substantial capital into AI-linked businesses over the past year, anticipating sustained demand for advanced chips and computing capacity. However, concerns over elevated valuations and the sustainability of investment spending have intensified.
Political uncertainty following the US midterm elections also contributed to the market pressure. The Democratic Party’s sweeping victory, which secured control of both chambers of Congress, initially triggered optimism among investors over the possibility of greater political and economic clarity.
However, concerns have emerged over the potential implications of Democratic lawmakers’ opposition to the rapid expansion of AI data centres. Several candidates had raised concerns about their electricity consumption, environmental impact and costs for local communities.
Investors are now assessing whether the changed political landscape could lead to tighter regulations, restrictions or delays in data-centre projects, potentially affecting companies across the AI supply chain.
Profit-booking following the previous session’s sharp rally further accelerated the decline. On November 4, the Dow Jones had gained more than 1,000 points at the opening, while the S&P 500 recorded its biggest daily percentage gain in three months.
However, investors began reducing their exposure when markets opened higher on November 5, with selling pressure intensifying as technology and semiconductor stocks weakened.
The midterm election results also represented a major political setback for President Donald Trump, with Democrats gaining control of Congress amid voter concerns over living costs, economic conditions and the administration’s policies, including the Iran conflict.
With control of both chambers, Democrats are expected to play a significant role in shaping the legislative agenda and scrutinising the administration during the remaining two years of Trump’s presidency.
