AI stocks plunge as Wall Street wobbles

U.S. stock markets suffered a sharp decline Thursday, with the S&P 500 falling 3.9%. The drop erased the gains from the previous day, which had been the best trading session in three months. The index is on track for its steepest decline since April 2025, when President Donald Trump announced tariffs that initially shocked global markets.

The Dow Jones Industrial Average lost 1,656 points, or 3.1%, as of 1:46 p.m. Eastern time. The Nasdaq composite, which tracks many technology companies, fell 5.2%. This places the Nasdaq more than 10% below its all-time high set in October, a decline investors classify as a correction.

Global markets felt the pressure as investors worried about the high cost of borrowing money. These costs may slow the construction of new artificial intelligence data centers. South Korea’s Kospi index tumbled 5.3%, and Japan’s Nikkei 225 sank 1.8%.

Tuesday’s midterm elections added to the uncertainty. Democratic victories in the U.S. raised the possibility that future government actions could pause data center construction. A pause in construction would reduce purchases of AI chips, electricity, and other services that currently drive a large portion of U.S. economic growth.

Individual tech stocks led the losses. Nvidia fell 8.7%, following a 3.2% drop the day before. Because Nvidia is one of the largest companies in the S&P 500, its performance heavily influences the overall index. Advanced Micro Devices tumbled 15.5%, and CoreWeave, which rents AI chip access via the cloud, fell 12.5%. GE Vernova, which helps power data centers, sank 7.7%.

Every sector in the S&P 500 lost ground Thursday. A few companies posted big gains, but they did not offset the broader losses. AppLovin jumped 28.5% after reporting revenue and profit that exceeded analyst expectations. The company also approved a program to buy back up to $3.2 billion in its own stock, raising the total value of its buyback program to $3.6 billion. Tapestry, the parent company of Coach and Kate Spade, rallied 6.5% after raising its forecasts for the current fiscal year.

In the bond market, yields continued to ease. The yield on the 10-year Treasury fell to 4.83% from 4.90% late Wednesday. This is a drop from 4.95% on election night and above 5.30% last month. The decline suggests investors are moving capital into U.S. Treasury bonds as a safer alternative to stocks. This shift occurred despite recent reports showing fewer U.S. workers applied for unemployment benefits and that summer productivity improved more than economists expected.

Oil prices recovered some of their previous losses. A barrel of Brent crude rose 3.6% to $98.03, recovering part of its nearly 9% drop from the day before. Uncertainty remains about the war with Iran and when the global energy industry can return to normal conditions.

In Europe, the FTSE 100 dipped 0.4% after the Bank of England increased its main interest rate for the first time in three years. The bank cited high inflation as a reason for the move. Bank Governor Andrew Bailey said at a press briefing that resolving the conflict in the Middle East is the best outcome for financial stability.

Bank of England officials indicated that future interest rate decisions will largely depend on developments in the Iran war. The conflict has sent oil prices and inflation higher worldwide, affecting borrowing costs for businesses and consumers.