Dow Plunges 1670 Points as Nasdaq Enters Correction Territory

US financial markets suffered a sharp reversal on Thursday as investors sold technology shares amid concerns that the Democratic Party's midterm election victories could slow the expansion of artificial intelligence infrastructure and data centers. The Nasdaq Composite fell 5%, the S&P 500 lost 4%, and the Dow Jones Industrial Average dropped 1,670 points, or 3.1%.

The Nasdaq entered correction territory, trading more than 10% below its record high from the previous month. The Dow also erased nearly all its gains from Wednesday's postelection rally, when the index surged more than 1,500 points in its strongest session since April 2025.

The Russell 2000 small-cap index declined 4.3%, also entering correction territory. The S&P 500 was heading toward its worst daily performance since April 2025, according to market data reported by CNBC.

Technology companies associated with artificial intelligence infrastructure experienced particularly heavy losses for a second consecutive session. Broadcom and Nvidia each declined 8%, while Oracle shares dropped 7%.

Qualcomm also fell 10% despite reporting earnings above analysts' expectations. The company's weaker-than-expected financial outlook contributed to the decline. Meanwhile, the iShares Semiconductor ETF dropped more than 10%, potentially marking its worst session since the COVID-19 outbreak in March 2020.

Smaller cloud infrastructure providers also faced substantial selling pressure. CoreWeave declined 11%, while Nebius and Iren each lost 16% as investors reassessed the industry's prospects following election results across several states.

Sen. Bernie Sanders of Vermont, who caucuses with Democrats, has previously called for a national moratorium on data center development. In a post on X on Wednesday evening, Sanders wrote:

"Americans don't want Big Tech oligarchs wrecking the environment, gutting jobs and threatening humanity's future."

Investors are reassessing the potential political implications for technology infrastructure spending, according to Tim Holland, chief investment officer at Orion.

"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. It's about tone and tenor from the party that did really well, incredibly well, at the federal level and at the state level," Holland said.

The technology sell-off also spread into other sectors, with industrial giant Caterpillar losing 5% and JPMorgan falling 4%. Boeing and Nike each declined 3%, reflecting broader weakness across the market.

Keith Lerner, chief investment officer at Truist Wealth, described the growing pressure on stocks beyond the technology sector.

"Unlike yesterday, you're just seeing that the sell-off in tech, the size of it, is now feeding itself into the broader market. The rubber band is becoming increasingly stretched," Lerner said.

All 11 sectors of the S&P 500 traded lower on Thursday. The Nasdaq also fell below its 200-day moving average for the first time since April, while the S&P 500 approached the same technical threshold, trading less than 1% above it.

Several major technology companies, including Nvidia, Advanced Micro Devices, Marvell Technology, Micron Technology, Sandisk and Cisco, also traded below their respective 200-day moving averages.

Despite the steep declines, the New York Stock Exchange's market-wide circuit breakers were not triggered. Trading pauses require the S&P 500 to fall at least 7% for Level 1 or 13% for Level 2 between 9:30 a.m. and 3:25 p.m. ET. A decline of 20% activates Level 3 and suspends trading for the remainder of the day.

The previous trading session had delivered substantial gains following the Democrats' decisive midterm victories. The Dow advanced more than 1,500 points, while the S&P 500 and Nasdaq Composite each gained more than 1%.

Elsewhere, McDonald's received a more positive assessment from Wells Fargo after reporting better-than-expected earnings. The bank maintained its overweight rating and raised its price target to $300, implying approximately 7% upside from Wednesday's closing price.

Analyst Zachary Fadem highlighted the company's latest financial results and progress on affordability initiatives.

"Q3 cleared a low bar, shares were washed out & MCD cited notable progress on value w/ new steps in '27. Skepticism likely persists… but [Wednesday's] print is a step in the right direction," Fadem wrote in the bank's research note.

McDonald's shares subsequently retreated more than 1% during Thursday afternoon trading.