After a post-election “sugar high” on Wednesday, which saw the Dow Jones Industrial Average surge 3% for the largest post-midterm election rally in 44 years, the markets went into a major auto-correct/sell off over the next two trading session. The Dow gained 1,569 points to close at 53,356, on Wednesday, only to lose those gains and more (1,833 or 3.4%) after trading closed on Thursday.
In addition to the Dow posting big losses, the Nasdaq Composite did even worse, notching its steepest one-day drop since April 2025, confirming what they call a ‘correction’ in the wake of Tuesday’s Democratic landslide. With multiple states notching Democratic wins, fears of tighter regulations regarding the AI build out and growing opposition to massive data center construction saw tech investors pull back in a big way.
The sell off wiped out $3 trillion in stock market value from S&P 500 companies alone.
The Nasdaq had their biggest drop since President Trump announced his tariff policy in April 2025, with a 10% “correction” from its record-high October 6 close.
“Investors appear to be recognizing that some newly elected members of Congress and governors are looking to slow the pace of AI infrastructure development,” said Melissa Brown, global head of investment decision research at SimCorp. “While it seems unlikely that they will be able to stop it altogether, any slowdown would raise concerns because the AI growth story has largely depended on the rapid buildout of supporting infrastructure.”
Chipmakers took the biggest hits, as giant Nvidia dropped 9%, while the Philadelphia SE Semiconductor index dipped over 12%, but other large-cap tech stocks lost ground after Wednesday’s rally. Meta Platforms lost 4%, Amazon and Alphabet each lost 2.2%.
Qualcomm dropped 9.5% after the chipmaker fell short of Wall Street’s estimate for fourth-quarter smartphone chip sales.
Data center companies IREN and Applied Digital lost more than 14%, while CoreWeave lost almost 10%.
AI-exposed utilities and equipment suppliers GE Vernova and Constellation Energy fell 7.5% and 2.5% respectively.
The S&P 500 lost 4.36% on Thursday, ending the session at 7,353.73 points, but remains up 7.4% for 2026, while the Nasdaq remains on the plus side by 4.6% for the year, even with posting a 3.4% loss for the week.
“This feels like the capitulation phase for the data center capex beneficiary stocks, especially the semi-conductors,” said Jed Ellerbroek, portfolio manager at Argent Capital Management. “But I think the magnitude of the moves is outsized.”
On Friday, a mixed bag closed out the week of trading, as the Nasdaq led the session, rising 1.1%, while the S&P increased by 0.3%. The Dow however declined another 0.5%, closing at 51,285.73.
Some of the biggest losers in the post-election sell off were some of Friday’s biggest gainers. Advanced Micro Devices, Intel and CoreWeave were up 11%, 7.7% and 6.3% respectively.
Still with the tech rout that unfolded for the week, Anthropic’s mega IPO is now coming under question. The Wall Street Journal reported on Thursday that major potential investors are now skeptical it can proceed at the expected valuation of $1.5 trillion. Anthropic could opt to raise less money or lower the target valuation, according to the report.
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