Financeupdated 35m ago3 min read
AI Data-Center Stocks Plunge as S&P 500 Drops 4.4% in Wall Street Sell-Off
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AI/data-center stocks slump after Democratic sweep; S&P 500 falls 4.4%. Nasdaq leads loss; tech-heavy indices drop biggest since April 2025.
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Wall Street’s AI shock
A brutal sell-off swept through Wall Street Thursday, led by stocks tied to the buildout of AI data centres, and the S&P 500 fell 4.4% for its worst day since U.S. President Donald Trump shook markets worldwide in April 2025 with his "Liberation Day" tariffs.
The Dow Jones Industrial Average sank 1,833 points, or 3.4%, while the Nasdaq Composite tumbled 5.5%, and the Nasdaq was 11.9% below its all-time high set last month.
The sell-off also hit Canada’s main stock index, which lost 736.13 points at 35,605.27, and it weighed on South Korea’s Kospi index, which tumbled 5.3%.
Nvidia fell 9.3% and was the heaviest weight on the S&P 500, while Advanced Micro Devices tumbled 17.3% and CoreWeave fell 9.8%.
The market’s move followed fears that the construction of further AI data centres may slow because of how expensive it had become to borrow money, and the nationwide victories for Democrats raised the possibility that governments could force pauses in construction.
Elections, rates, and credit
Michael O'Rourke, chief market strategist at JonesTrading in Stamford, Connecticut, said the slowdown of the data center buildout was "the real key theme that's going to stick." Bruce Zaro, managing director at Granite Wealth Management in Plymouth, Massachusetts, said, "There's going to be a lot of pushback about those data centers being geographically located in someone's backyard." Reuters also tied the sell-off to fears that the Democratic sweep could stall AI infrastructure expansion and force a reckoning for smaller firms whose capacity to raise funds has already been limited by higher interest rates and tighter financial conditions.
In the bond market, the yield on the 10-year Treasury fell to 4.84 per cent from 4.90 per cent late Wednesday, and the 10-year yield had been at 4.95 per cent on election night and above 5.30 per cent last month. The market’s shift also showed up in the VIX index, which posted its largest increase since December 2024, as the Nasdaq Composite fell 5.5% and moved toward correction territory after losing nearly 12% from its record close on October 6.
What investors watch next
Investors weighed the possibility that governments could slow construction of AI data centres, and that any slowdown would mean fewer purchases of AI chips, electricity and other products and services that are getting vacuumed up in the AI frenzy. The rout rippled overseas while Treasury yields eased, and the price of a barrel of Brent crude oil rose 3.9 per cent to $98.29 as it recovered a chunk of its nearly nine per cent drop from the day before. Quartz en Français said the Nasdaq Composite fell by more than 5% on Thursday and was on the verge of entering correction territory, with the S&P 500 falling 4% and the Dow Jones Industrial Average dropping 1,639 points.
Quartz en Français also reported that Democrat Gina Hinojosa defeated Republican Governor Greg Abbott in Texas and called for ending data-center development in the state, while Wells Fargo estimated that Texas holds 27% of the gigawatts of data-centre capacity planned for the United States. Reuters framed the next test as whether the rotation survives, with analysts and portfolio managers watching how CoreWeave and Iren trade as the Texas plans take shape and what the new Congress takes up.