AI selloff pushes the Nasdaq into a correction and drags Asian markets down 6%

The S&P 500 fell 4.4% on Thursday, its worst day since April 2025, wiping out close to $3 trillion in market value. The Nasdaq Composite dropped 5.5% and entered a correction, more than 10% below its October 6 record, and the Dow Jones Industrial Average lost 1,833 points, or 3.4%. Chip stocks led the fall: the Philadelphia semiconductor index sank more than 12% and Nvidia 9.3%. The rout spread to Asia on Friday. South Korea’s Kospi and Japan’s Nikkei each closed about 6% lower. Wall Street steadied later on Friday: the S&P 500 rose 0.3% to 7,377 and the Nasdaq 1.1%, while the Dow slipped 0.5%.

The trigger was Tuesday’s midterm elections. Investors fear that Democratic wins, including control of both houses of Congress from January, will bring tighter rules on artificial intelligence and slow the construction of the data centers that drive much of the industry’s spending. President Trump keeps his veto, which limits what Congress can do, so the main resistance to new data centers is expected at the state and local level. A strong jobs report added a second worry: employers added 165,000 jobs in October, well above forecasts, and unemployment stood at 4.1%. That raised expectations that the Federal Reserve will raise interest rates in December.

Why it matters

This is today’s highest-impact story because AI companies make up a large share of the stock markets that hold retirement savings around the world, and a sharp change in how investors value them reaches far beyond Silicon Valley. Thursday’s losses came from a political shift, not a single company’s results, so they may not fade quickly. What to watch: whether chip stocks keep recovering next week, how state governments act on data center projects, and the Federal Reserve’s decision in December.