U.S. stock markets experienced a sharp sell-off on Thursday, reversing gains made after the midterm elections. The Dow Jones Industrial Average plunged 1,833 points (3.44%) to close at 51,523, erasing the previous day’s rally. The Nasdaq Composite tumbled 5.52% to 24,315, slipping into correction territory after dropping more than 10% from its recent high. The S&P 500 also fell 4.36% to 7,354. The broad sell-off was the worst for the major indexes since April 2025 and extended to small-cap stocks, with the Russell 2000 entering correction as well.

The sharp decline was led by technology stocks, particularly those tied to the artificial intelligence sector and semiconductor industry. Chipmakers like Broadcom and Nvidia dropped 10% and 9% respectively, while Qualcomm’s shares fell 9% despite beating earnings estimates due to a weaker outlook. Data center-related firms and cloud providers also saw steep losses amid growing concerns that the Democratic sweep in Congress could slow data center developments. Senator Bernie Sanders and other Democrats have proposed moratoriums on data center expansion citing environmental and economic concerns, fueling investor anxiety.

The intense selling in tech stocks began to pressure other sectors, with industrial giant Caterpillar falling 6% and financial stocks such as JPMorgan declining 4%. The market volatility increased the CBOE Volatility Index (VIX), Wall Street’s fear gauge, to 28.09, its highest since March 2026. Investors are now reassessing the aggressive capital expenditure cycle driven by AI infrastructure buildout, waiting for clearer signals on how midterm results will shape regulation. Some analysts view the current downturn as the beginning of a longer correction in AI-related equities.

Although the sell-off eased the immediate pressure on the Federal Reserve to raise interest rates in December, the outlook remains uncertain. Odds of a rate hike dropped to about 70% from over 80% earlier in the week. International markets showed mixed reactions as Asian tech stocks also tumbled, while European indices opened modestly higher ahead of the Bank of England’s expected rate hike. Gold and silver extended their post-election rally, supported by a weaker dollar and declining Treasury yields, positioning metals for their best weekly gains since August.