THE CRUNCH
The Nasdaq was heading for its biggest one-day drop in a year and a half on Thursday after slumping by up to 5%, leaving the index more than 10% under its recent record high, a level traders call a correction. The slide, the steepest since the "liberation day" tariffs of April 2025, came as worries over massive AI spending rippled out to markets worldwide.
The trigger was the US midterm results. With Democrats winning several governorships and voters rejecting datacentre projects in local ballots across the country, traders expect newly elected Democratic governors to make life harder for new datacentre schemes. Chip stocks led the slump, with SanDisk down 19% and Western Digital falling 16.5%, and Nvidia was the top faller on the Dow, dropping 6.7%.
The sell-off was broad: the Dow was down more than 1,500 points, or 2.8%, in early afternoon trading, the S&P 500 fell 3.7%, and the VIX "fear index" jumped 40% to its highest level since the early weeks of the Iran war. The day marked a sharp reversal from Wednesday, when Wall Street had its biggest daily gain in months on expectations that Democratic success could restrain the White House.
Neil Wilson of Saxo UK called it a "complete capitulation-level event" in tech stocks, while Dan Ives warned the results signal the pace of datacentre buildout will slow. Ted Parkhill, who runs Incline Investment Management, summed up the mood: "The market's moving from the promise of AI to the price of AI."