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The Nasdaq Composite tumbled into correction territory on Thursday, dropping 3.9% as investors aggressively sold off technology and semiconductor stocks. The benchmark index is now trading 10% below the record close it reached last month, according to reporting by Fred Imbert for CNBC.
Tech and AI Sector Sell-Off
The decline was driven largely by a broad retreat in artificial intelligence and chip-related equities. Major industry players faced significant losses, with Nvidia falling 8%, while Micron and AMD dropped 16% each. Analysts at the Macro Research Board warned that the downturn in AI-related stocks may continue, noting that investors are beginning to re-evaluate previously high profit expectations for the sector.
The sell-off extended to Asian markets, where semiconductor stocks faced heavy pressure. Japanese firms Advantest and Lasertec plunged 11.7% and 11.8% respectively, while South Korea’s SK Hynix fell 9%. Market participants attributed the volatility to concerns that a Democratic-controlled Congress following the U.S. midterm elections could lead to tighter regulations on data center development and AI infrastructure.
Economic Data and Market Reactions
Despite the tech-focused decline, other areas of the market showed resilience. The Dow Jones Industrial Average opened the session with a 0.6% gain, adding 334 points. Meanwhile, the CBOE Volatility Index, often referred to as Wall Street’s “fear gauge,” rose to 22.59 as the equity sell-off intensified.
Economic reports released Thursday provided a mixed picture. The Labor Department reported that initial jobless claims fell to 189,000 for the week ended Oct. 31, matching the lowest level since 1969. Additionally, the Bureau of Labor Statistics noted that nonfarm business sector productivity surged 3.6% in the third quarter, while unit labor costs contracted by 0.7%.
Global Market and Corporate Updates
In Europe, markets largely trended upward. The FTSE 100 reached a three-month high, rising 0.86% as investors awaited an interest rate decision from the Bank of England. German lender Commerzbank reported a 45% jump in third-quarter net profit, while shipping giant Maersk raised its full-year profit guidance for the third time this year, citing resilient global trade and demand for AI infrastructure.
Other corporate developments included:
- Wendy’s: Shares remained relatively flat after the company rejected a $1.4 billion takeover bid from a Trian Fund Management-led group.
- Rheinmetall: The German defense firm saw shares drop 16% after cutting its full-year guidance due to military contract delays.
- Diageo: The spirits manufacturer reported a 1.2% rise in net sales but warned that the ongoing conflict between the U.S. and Iran continues to create geopolitical and supply chain volatility.
- Indonesia: The country’s economy grew 5.47% in the third quarter, exceeding economist expectations, which helped its benchmark index rise nearly 2%.
The market’s recent movements follow a Wednesday rally fueled by President Trump’s acknowledgement of the Democratic victory in the midterm elections, which investors hoped would reduce political polarization. Looking ahead, traders continue to monitor potential legislative impacts on the AI sector and broader economic policy.
