US Stock Market Plunges Sharply - Nasdaq Enters Correction Territory

US stock indices continued their sharp decline on Thursday after trading began. Particularly heavy pressure was recorded on the technology sector, as investors started pulling capital out of chipmakers' shares. Market participants were also assessing what impact the Democrats' significant victory in the US midterm elections could have on artificial intelligence regulation.

As of 10:39 AM Eastern Time, the Nasdaq Composite had fallen 4.2% to 24,663.81 points. The index was already down more than 10% from its last record close, which technically marks entry into correction territory.

The S&P 500 dropped 2.7% to 7,485.82 points, while the Dow Jones Industrial Average gave up its earlier gains, falling 1.6% to 52,485.20 points.

This decline followed a sharp rally in the previous trading session. On Wednesday, the Nasdaq rose 1.4%, the S&P 500 gained 1.6%, and the Dow Jones jumped 3%, posting its best daily performance since April 9, 2025. According to Deutsche Bank analysts, the market found relief at the time as some of the uncertainty surrounding the midterm election results was removed.

However, pressure on chipmakers' shares continued and spread to Asia's semiconductor sector as well. Deutsche Bank analysts noted that some segments of the technology sector had also traded weakly the previous day, as investors lacked clarity on how the election outcome would affect regulation in areas such as data centers. They said the uncertainty deepened further overnight.

Shares of Nvidia, the largest manufacturer of AI chips, fell 7.3%. AMD shares dropped 14.9%, while Intel's fell 7.8%. The Philadelphia Semiconductor Index, considered one of the sector's key indicators, declined by more than 8%.

The pressure also spread to Asian markets. In South Korea, shares of memory chip makers SK Hynix and Samsung Electronics fell sharply. In Taiwan, Foxconn's shares dropped more than 3%, while shares of TSMC, the largest contract chipmaker, fell 0.9%.

Investors are concerned about the possibility that, after gaining control of both chambers of Congress, Democrats may attempt to impose stricter regulation on the artificial intelligence sector and slow the pace of large-scale data center construction. The new Congress's term begins in January.

According to Macquarie Group analysts, the election of Democrat Gina Hinojosa as Governor of Texas could pave the way for stricter AI infrastructure regulations in the state. Texas currently has a number of major data center projects planned.

According to Vital Knowledge analysts, the key question for the market is whether the election results will trigger a long-term shift by investors away from AI infrastructure providers toward companies that already own large-scale AI platforms, as well as toward sectors outside of technology.

At the same time, despite the Democrats' control of both chambers of Congress, President Donald Trump retains veto power over legislation. According to Deutsche Bank analysts, this division of power could also ease concerns about fiscal policy, as passing packages involving tax cuts and increased government spending will become more difficult.

Elsewhere, Brent crude oil futures rose 2.5% to reach $96.94 per barrel. On Wednesday, the possibility of a diplomatic resolution to the Iran war sharply pushed oil prices lower, driving Brent below $100, close to its lowest level in two months.

Relatively lower oil prices could ease energy-driven inflationary pressure and reduce fears of aggressive interest rate hikes by the Federal Reserve (Fed).