US stocks recorded their sharpest decline since April 2025 on November 5, 2026, as a broad sell-off erased the gains from the post-election rally. The S&P 500 fell 4.36 percent to 7,353.73, while the Nasdaq Composite plunged 5.52 percent to 24,315.00, pushing the tech-heavy index into correction territory, according to The Straits Times.
Nasdaq Index Falls into Correction Territory
The market downturn resulted in significant losses for the largest technology firms. The Nasdaq 100 index fell 6.36 percent, while the broader Nasdaq Composite wiped out roughly $2.5 trillion in market value. The index is now more than 10 percent below its October 6 record high, meeting the technical definition of a correction. The Dow Jones Industrial Average shed 1,833 points, or 3.44 percent, to settle at 51,523.06.
David Bahnsen, chief investment officer at The Bahnsen Group, characterized the correction as a movement driven by valuations that became completely disconnected from reality.
He added, Thursday’s market action is what happens when euphoria and hype become the reason why stocks go up, rather than fundamentals, and that’s exactly what has been happening with tech stocks.
Semiconductor Stocks Drop on Regulatory Fears
Investor sentiment shifted due to concerns that the Democratic party’s midterm success could lead to stricter regulations on artificial intelligence infrastructure. The Philadelphia Semiconductor Index fell 12 percent, marking its biggest single-day drop since 2020.
Neocloud providers, which rent access to AI chips, also faced pressure. CoreWeave shares fell 10 percent and Nebius Group lost 15 percent, while other neocloud firms like IREN saw declines of more than 14 percent. Analysts at UBS estimated that up to 30 percent of data center capacity planned for 2028 could be at risk if construction pauses continue across key states.
In a very ugly session for tech, the NASDAQ is now down a full 5%, pulling down the S&P 500 by 4% and the Dow by 3%. (CNBC chart below.)#economy #stocks #markets pic.twitter.com/LqSqU2KUqM
Volatility Index Surges Amid Leveraged ETF Activity
The CBOE Volatility Index (VIX) surged, touching 28, its highest level since March 31. This environment spurred massive activity in leveraged ETFs. The 2x Long VIX Futures ETF (UVIX) soared 61.16 percent on $576 million in turnover, while the 1.5x Long VIX Short-Term Futures ETF (UVXY) rose 45.38 percent on $1.04 billion in volume. Conversely, inverse sector ETFs saw significant gains, with the Triple-Leveraged Inverse Financials ETF (FAZ) rising 7.98 percent and the 2x Inverse Energy ETF (ERY) gaining 5.70 percent.
OpenAI Attempts to Mitigate Political Backlash
The market reaction followed reports of potential legislative pushback against large-scale data center projects. Meta President Dina Powell McCormick noted Wednesday that data centers were front and center in exit polls across the country.
OpenAI has begun attempting to mitigate this backlash, releasing a framework that includes pledges to share data regarding noise, water, and energy use, and to reduce power usage during peak times to ensure residents do not face higher utility bills.
Speaking at the WSJ Tech conference in Napa, California, on Wednesday, Greg Brockman stated, “A lot of our shift over the course of this year has really been to realise that from San Francisco trying to build infrastructure in Texas, Georgia, and other places, you can’t just tweet and say: ‘This is going to be good.’ You need to be in those communities.”
Global Market Reactions
International indices followed the downward trend. South Korea’s Kospi index tumbled 5.28 percent, while Japan’s Nikkei 225 fell 1.8 percent. In the United Kingdom, the FTSE 100 dipped 0.4 percent as the Bank of England raised its main interest rate. Addressing the economic environment, Bank of England Governor Andrew Bailey noted, The best thing that can happen is to resolve the conflict in the Middle East; there's no question about it.
The S&P 500 fell 4.4% today, its biggest down day since April 2025 (during tariff turmoil) and 37th biggest decline since 1989. Important for investors to remember: volatility cuts both ways and is not linear over time. Big down days and big up days often occur near each other. pic.twitter.com/gHX99Az34p
Market analysts suggest that where the market goes next will depend on the pace of policy implementation following the midterms, changes in semiconductor industry conditions, and the Federal Reserve’s response to tightening financial conditions.
Earlier coverage: SpaceX, Tesla stocks sink as analyst warns Democrats' victory will create 'major hurdles' for AI build-out