NEW YORK, Nov. 5 (Xinhua) -- U.S. stocks plunged Thursday morning as another sell-off in stocks tied to the artificial intelligence (AI) data center buildout weighed heavily on Wall Street.
In late-morning trading, the S&P 500 fell over 3 percent and was on track for its worst loss since the 2025 "Liberation Day" tariff shock. The Dow Jones Industrial Average dropped 1,146 points, or 2.1 percent, and the Nasdaq Composite tumbled 5 percent, dipping into correction territory.
Investors worried that Democratic victories in Tuesday's midterm elections could bring government-ordered pauses on new data centers and tighter scrutiny of the AI buildout, even as big technology companies borrow heavily to fund the expansion.
Chip stocks led the rout for a second straight day. Nvidia lost over 7 percent and was by far the heaviest weight on the S&P 500, Advanced Micro Devices tumbled over 15 percent, and cloud company CoreWeave fell 14.9 percent. Qualcomm fell about 12 percent after the company reported weaker-than-expected smartphone chip sales amid sluggish demand. Tesla and SpaceX also extended their post-election losses.
The VIX, known as Wall Street's fear gauge, jumped 48 percent Thursday morning, marking its biggest one-day percentage gain since April 4, 2025, when investors fled stocks in reaction to U.S. President Donald Trump's freshly announced tariffs.
"A shakeout among the most speculative parts of the theme is underway," said MRB Partners in a Thursday note. "The US mid-term election results will add to headwinds for big tech and the data center buildout."
The drops for AI stocks drowned out strong earnings elsewhere. AppLovin soared more than 30 percent after reporting revenue and profit above expectations, and Tapestry, the company behind Coach and Kate Spade, rallied 6.7 percent on a stronger-than-expected profit and raised forecasts.
Jordan Watson, a portfolio manager at Tandem Investment Advisors, said the rally and the rotation away from AI names could prove temporary, but warned that "we may be headed for more volatility as investors digest the election results and potential policy implications."
U.S. crude oil reversed course Thursday. West Texas Intermediate futures and Brent crude futures both were last up more than 2 percent.
"Energy affordability shaped the midterms. A divided government will now face pressure to shield consumers from rising data centre power costs while speeding up new energy supply," said Coco Zhang, Vice President of ESG Research at ING. "Onshoring and trade protections will continue, despite higher near-term costs, as energy security remains a priority." ■