AI market rout pushes Nasdaq down 5.5% into correction territory
The deepening AI market rout dragged the tech-heavy Nasdaq Composite down by more than 5.5%, confirming a formal market correction. Surging doubts about artificial intelligence spending returns and political pushback against data centers sparked heavy selling across global equity markets.
⚡ Key numbers:
- -5.52% decline for the Nasdaq Composite index
- -4.36% drop for the broad S&P 500 index
- 28 peak reached by the Cboe Volatility Index (VIX)
- -12.2% plunge in shares of Japanese chip equipment maker Advantest
Wall Street benchmarks tumble into correction
A dramatic sell-off gripped Wall Street on Thursday as the Nasdaq Composite sank 5.52% to close at 24,315 points. The plunge left the tech index more than 10% below its recent peak, meeting the definition of a market correction. The S&P 500 dropped 4.36% to 7,354 points, while the Dow Jones Industrial Average dropped more than 3.4%, wiping out Wednesday's post-election gains.
The downturn reflected mounting skepticism over the commercial payoff of colossal data-center spending programs. Selling accelerated following Democratic victories in the U.S. midterm elections, as political pledges to restrict data-center expansion added regulatory headwinds to sector valuations already tested by corporate earnings and US midterm elections.
Asian semiconductor suppliers endure sharp sell-off
The rout reverberated through Asian trading sessions on Friday, battering hardware manufacturers that supply processors and components to U.S. cloud providers. In South Korea, SK Hynix fell more than 8%, while Samsung Electronics dropped 7%. In Japan, Advantest plummeted 12.2%, Tokyo Electron slid 7.3%, and investment conglomerate SoftBank Group dropped 11.6%.
Taiwanese chipmakers were equally hard hit, with TSMC declining 9.6% and Foxconn falling 9.4%. Retail stock selling accelerated during the downturn to levels rarely seen since 2020, while the Cboe Volatility Index (VIX) spiked to 28, reaching its highest level since March 31 as stop-loss orders were triggered across regional desks.
Macro headwinds and upcoming employment data
The equity decline arrived alongside shifting monetary expectations, with the CME FedWatch Tool pricing an 82% probability of a Federal Reserve rate hike in December following strong private payroll numbers. In Europe, the German DAX retreated 0.43% to 26,325 points as global risk sentiment soured.
Market participants are now focusing on the official U.S. October nonfarm payrolls report scheduled for Friday at 13:30 GMT. Economists forecast 65,000 new jobs following September's reading of 29,000, a key release that could further influence interest rate trajectories.
What to watch next
- U.S. October nonfarm payrolls release at 13:30 GMT (forecast 65K vs 29K in September)
- Congressional legislative steps regarding the data-center moratorium proposal
- December Federal Reserve meeting as rate hike odds hover near 82%
Frequently asked questions
What triggered the correction in the Nasdaq Composite?
The Nasdaq fell 5.52% to trade over 10% below its previous high, driven by skepticism about returns on massive AI capital investments and political calls for a moratorium on new data centers.
How did major semiconductor stocks perform in Asia?
Chip stocks fell sharply across Asia: Advantest dropped 12.2%, TSMC declined 9.6%, SK Hynix lost more than 8%, Tokyo Electron shed 7.3%, and Samsung Electronics fell 7%.
What is the market pricing for the next Federal Reserve meeting?
According to the CME FedWatch Tool, financial markets are pricing an 82% probability that the Federal Reserve will deliver an interest rate hike in December.
Sources: CNBC, MarketWatch, FXStreet, BBC, Yahoo Finance.
Disclaimer: This article is for information purposes only and does not constitute investment advice. Data as of Nov 6, 2026, 06:17 may vary by source. Trading leveraged CFDs carries a high risk of losing money.
This article contains AI-generated content.
