Nasdaq Plunges Into Correction Territory, Dow Drops More Than 1,800 Points – The Epoch Times

Traders work on the floor of the New York Stock Exchange during morning trading in New York City  (AP News)

A sell-off in tech stocks has pushed the Nasdaq composite index into correction territory.

The tech-fueled index dropped by 1,421 points, or 5.52 percent, to 24,315 on Nov. 5.

The sharp decline leaves the Nasdaq more than 10 percent below the record closing high it set last month, meeting Wall Street’s definition of a correction. But it is still up by approximately 5 percent year-to-date.

The Dow Jones Industrial Average—a 30-stock blue-chip index—erased more than 1,800 points, or 3.44 percent. The broad-market S&P 500 fell by 334 points, or 4.36 percent, to 7,353.

Both leading benchmarks remain up, by 7 percent and 7.4 percent, respectively, this year.

The Russell 2000—an index of 2,000 small-cap companies—dropped by more than 4 percent.

President Donald Trump blamed the midterm election results for one of the worst days in the U.S. stock market’s history.

“Such a sad thing to watch!” the president wrote on Truth Social. “It took so much work to get us to a level that no one has ever seen before, and then this. Your 401(k)s have, therefore, dropped.”

The sell-off follows a post-election rally a day earlier, when investors welcomed political certainty and divided government. The Dow posted its best day since April 2025, soaring by more than 1,500 points.

“Yesterday’s stock market rally in the face of the Democratic landslide made no sense. In contrast, today’s sell-off makes perfect sense. Expect more days like today,” Peter Schiff, chief economist and global strategist at Euro Pacific Asset Management, said on X.

Stocks linked to the artificial intelligence trade largely contributed to the sell-off. Other sectors—consumer staples, energy, healthcare, and utilities—held steady.

Investors may be concerned that a federal- and state-level blue wave that swept through midterm elections could threaten the AI boom. A chorus of lawmakers has argued for more AI regulation, and some have gone as far as to call for a moratorium on data-center construction.

Shares of chipmakers Advanced Micro Devices, Broadcom, Nvidia, and Qualcomm slumped. The widely watched iShares Semiconductor ETF—a popular index composed of chipmakers—fell by about 12 percent.

Neocloud companies—CoreWeave, IREN, and Nebius, for example—also plummeted. The industry—cloud computing providers built for immense AI workloads—has been beaten in recent weeks over concerns that these companies will be unable to borrow money to fund their infrastructure buildout.

Elon Musk’s SpaceX and Tesla Motors, meanwhile, both suffered steep losses.

Several major U.S. tech stocks are officially in a bear market, meaning down by at least 20 percent from their recent peaks.

The sell-off occurred despite a solid third-quarter earnings season, as a majority of S&P 500 companies that have reported their financials have beaten expectations.

The market narrative has ostensibly shifted from “AI changes everything” to “Blue wave means data centers will never be built again in this country,” said Chris Zaccarelli, chief investment officer for Northlight Asset Management.

“We do agree that sentiment has shifted and building data centers will become more difficult, but if there is a productive business case for building them, then they will get built—and Artificial Intelligence will continue to be a more important part of the technology solutions that businesses use every day,” Zaccarelli told The Epoch Times in an emailed note.

The situation is a lot more “nuanced” than the market’s behavior, he added.

1.1Leverage and Sentiment

The sell-off stems from record leverage and weakening market sentiment, according to popular financial newsletter The Kobeissi Letter.

“Sentiment is the ultimate driver of price,” it said on X.

“For months, we have been commenting on the historic levels of leverage in today’s markets. This is precisely what happens when sentiment reverses in an overleveraged market.”

Margin debt—the amount investors borrow from their brokerage accounts—was the second-highest level on record in September, according to Financial Industry Regulatory Authority data. Margin debt was $1.48 trillion, up from $1.45 trillion in the previous month.

Traders sought shelter from the red ink by rotating into U.S. Treasury bonds. Yields were mostly red across the board, with the benchmark 10-year sliding below 4.84 percent.

Gold and silver prices were mixed. The yellow metal ticked up by 0.8 percent and silver declined by 0.7 percent.

Economists are penciling in a gain of 65,000 new jobs and an unemployment rate of 4.2 percent.