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U.S. stocks reversed Wednesday’s post-election rally on Thursday as investors sold AI, technology and semiconductor shares. The Dow fell 2.2%, the S&P 500 dropped 3.3% and the Nasdaq lost 5% in late trading; the semiconductor index was down 11%. The sell-off followed questions about the impact of Democrats’ election wins on AI infrastructure and other industries, while several market moves and the closing levels were still developing.
U.S. stocks fell sharply Thursday, erasing the gains from the previous day’s post-election rally as investors sold technology and semiconductor shares. The Dow Jones Industrial Average was down 2.2%, or more than 1,200 points, the S&P 500 fell 3.3%, and the Nasdaq Composite dropped 5% in late trading, according to Yahoo Finance’s market report.
The sell-off was concentrated in chipmakers. The PHLX Semiconductor Index fell 11%, while Nvidia, Broadcom, Micron and AMD were among the companies cited as hard hit. Yahoo Finance reported that the Nasdaq erased its entire Wednesday post-election advance within six minutes. The figures were intraday readings, not final closing results.
Investors had bought stocks Wednesday after Democrats won control of both chambers of Congress, with lower oil prices and Treasury yields also supporting the rally, Yahoo Finance reported. On Thursday, the publication said the S&P 500 had shed more than $2 trillion in market value by midmorning. The scale of the decline underscored how quickly sentiment shifted, but did not establish a single cause for the drop.
Market concerns included what a Democratic Congress could mean for AI infrastructure and data-center construction. Yahoo Finance also reported that shares of Tesla and SpaceX each fell more than 9% as investors considered possible regulatory obstacles to U.S. data-center projects and a potential merger between the companies. Those concerns were reported as investor reaction; the source did not establish that a merger had been agreed or that new regulatory decisions had been made.
The Rally Reversal Hits Tech
The rapid reversal shows that the election result did not settle how investors expect policy to affect companies. A sharp fall in chip shares matters beyond the semiconductor sector because those firms are closely tied to the build-out of AI computing capacity. The day’s losses indicate that investors were reassessing the outlook for that investment and the policy environment, rather than simply extending Wednesday’s relief rally.
The reported 11% drop in semiconductor shares and steep Nasdaq decline also put the market’s volatility in focus. Yahoo Finance said the CBOE Volatility Index rose more than 65% at one point, reaching 27.45, its biggest one-day jump in more than two years according to strategist Shay Boloor. That reading reflects a rise in expected volatility, not a forecast of a specific market outcome.
Investors also faced crosscurrents outside technology. Oil rose amid uncertainty over whether President Donald Trump would pursue a deal with Iran to end the war in the Middle East. Higher crude prices can affect expectations for inflation and business costs, but Thursday’s report did not establish what the oil move would mean for either.
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Election Gains Lasted One Day
The sell-off followed a dramatic session in the other direction. On Wednesday, the Dow rose 3%, which Yahoo Finance described as its best post-midterm day since 1982. Investors responded to Democratic victories that gave the party control of both chambers of Congress, while lower oil prices and Treasury yields helped support share prices.
Thursday’s market report placed the decline against historical comparisons. It said the Dow was heading for its worst second session after a midterm election in data dating to 1896, while the S&P 500 was on course for its worst such second day in the publication’s cited historical record. These were comparisons of the session’s direction and scale during trading, not final results. The Nasdaq’s losses also put it on track to close in correction territory, according to the report.
Other indicators offered a mixed picture. Challenger, Gray & Christmas reported that announced layoff plans in October fell to their lowest level since 2023, as companies focused on retaining current employees. That report preceded the U.S. employment report scheduled for Friday, which investors were awaiting for further information about labor-market conditions.
Closing Levels and Policy Remain Open
The reported index declines were intraday figures, and the source material does not provide final closing levels. It also does not establish whether the Nasdaq ultimately closed in correction territory or whether the S&P 500’s reported market-value loss persisted through the close.
The precise reasons for the sell-off remain unsettled. The report linked trading to chip and AI concerns and to investor reassessment after the election, but it did not identify one event or policy announcement that fully explained the move. The timing and terms of any potential SpaceX-Tesla merger, as well as its regulatory prospects, were not confirmed.
Oil’s rise was tied in the report to uncertainty about U.S. policy toward Iran, but no outcome for negotiations was reported. The employment report due Friday had not yet been released in the source material, so its findings and market implications were also unknown.
Investors Await Jobs and Policy Signals
Investors were looking ahead to Friday’s U.S. employment report for more evidence about the labor market, following the October layoff-plans data from Challenger, Gray & Christmas. The report may shape market expectations, but its results were not available at the time covered by Yahoo Finance.
Markets will also continue to respond to developments around AI investment, data-center construction and the new Congress’s policy direction. For now, the sell-off shows investor concerns, not enacted legislation or confirmed changes to company plans. Trading in oil and technology shares may also remain sensitive to developments in the Middle East and to fresh company or government announcements.
Key Questions
How much did the major U.S. indexes fall?
Yahoo Finance reported late-trading declines of 2.2% for the Dow, 3.3% for the S&P 500 and 5% for the Nasdaq on Thursday. Those were intraday figures; final closing levels were not included in the source material.
Which stocks or sectors were hit hardest?
Semiconductor shares led the decline. The PHLX Semiconductor Index was down 11%, and Nvidia, Broadcom, Micron and AMD were among the companies identified as hard hit.
Why did stocks reverse after Wednesday’s rally?
The report pointed to selling in AI and chip stocks and investor questions about how a Democratic-controlled Congress could affect AI infrastructure and data-center construction. It did not identify one confirmed cause for the entire market decline.
Did the Nasdaq close in correction territory?
Yahoo Finance said the Nasdaq’s 5% intraday decline put it on track to close in correction territory. The source material does not give the final closing result, so it does not confirm whether the index ended the day there.
What market information was expected next?
The U.S. employment report scheduled for Friday was the next major economic release mentioned in the report. Investors were also watching developments in Congress, AI investment, oil prices and the Middle East conflict.
Source: finance.yahoo.com
