US stocks slide as AI and chip sell-off wipes out post-election rally

US stocks fell sharply on Thursday, November 5, as a sell-off in chip and artificial intelligence shares erased the previous day’s post-election rally and more by the close, according to Deadline. The Dow Jones Industrial Average lost about 1,800 points, or 3.4%, while the Nasdaq fell 5.2%, Deadline reported.

The S&P 500’s closing loss was reported differently: Deadline put it at 4%, while BBC News reported a 4.4% fall. BBC News also said the Dow closed down more than 3.4%. Both accounts described losses across major US indexes, with the technology-heavy Nasdaq taking the steepest decline among the broad market measures cited.

Why technology shares fell

The retreat reached companies beyond chipmaking. Snap fell 13% after its earnings report on Wednesday, Deadline said. AMC Entertainment and Imax, which had each posted strong quarterly results between Wednesday and Thursday morning, still fell 12% and 6%, respectively. The losses showed the breadth of the day’s decline across technology and entertainment shares.

BBC News attributed part of the decline to investor concerns about tougher regulation after Democratic victories in Texas, Ohio and Georgia. Democrats campaigned against data centres and artificial intelligence, and ballots around the country included measures aimed at restricting development of the hubs that power the technology, the BBC reported. Some technology leaders said they had been caught off guard by the backlash against data centres.

The concerns also involved whether the spending behind the AI boom will generate returns. BBC News quoted Susannah Streeter, chief investment strategist at Wealth Club, saying that fears about returns on AI infrastructure were colliding with the prospect of a sharp slowdown in data-centre construction. Deadline likewise described investors questioning when heavy AI investment might produce clear returns. The reports describe concerns weighing on shares without identifying one definitive cause for the sell-off.

US markets had risen on Wednesday after Democratic victories in the midterm elections, according to both reports. Deadline said regulatory and business jitters had returned by Thursday. BBC News also reported concern among some investors that AI shares could be in a bubble due for a correction. That is an investor concern, while the reported market falls and the election-related regulatory debate formed the immediate context for the reversal.