Tech stocks had their worst day in months on Thursday, November 5, as fears of tougher rules on AI data centers hit chip makers hardest. The Nasdaq Composite fell 5.52% and the S&P 500 fell 4.38%. A rebound on Friday recovered only part of the damage. Here is what happened, why, and what traders are watching next.
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What happened on Thursday
Chip stocks led the drop. The iShares Semiconductor ETF fell 12.15%, and the Philadelphia Semiconductor Index fell about 12%, its worst day since March 2020. Nvidia lost 9.23%, AMD dropped 17.24%, and the selling spread to Microsoft (down 3.58%) and Apple (down 1.53%). By one tally, roughly $3 trillion in market value was erased in a single session.
Why it hit: three triggers
- Politics. Democratic wins in the midterms raised fears that lawmakers could slow or restrict data-center construction, especially where electricity demand is a local issue. Goldman Sachs estimates that about 45% of planned US data-center capacity faces possible restrictions.
- A hot jobs report. Payrolls rose 165,000 in October against forecasts of about 65,000, and unemployment fell to 4.1%. That kept a Fed rate hike in play for December. Higher rates weigh most on richly valued growth stocks.
- Nervous positioning. Weaker-than-expected growth numbers from AI companies in early October had already made investors sensitive to bad news. David Bahnsen of The Bahnsen Group warned of a possible “blow-off top” and said investors remain too exposed to the AI trade.
Not everyone sees a reset. Jefferies called the move “reactionary, not a fundamental reset.”
The week in numbers
| Day | Nasdaq Composite | S&P 500 | Dow |
|---|---|---|---|
| Wednesday, Nov 4 | +1.44% | +1.58% | +3% |
| Thursday, Nov 5 | -5.52% | -4.38% | -3.44% |
| Friday, Nov 6 | +1.09% | +0.31% | -0.46% |
| Week | -3.37% | -2.68% | -0.94% |
Friday’s closes were 24,579.42 for the Nasdaq, 7,376.86 for the S&P 500 and 51,285.73 for the Dow. The VIX, the market’s fear gauge, rose 32% over the week to 25.64. Bargain hunters came back on Friday: the semiconductor index rebounded about 4%, AMD rose 8% and Nvidia rose 6%. The Dow still slipped.
What an oversold reading does and does not mean
After a drop like this, screens fill with stocks whose 14-day RSI is below 30, the usual oversold line. Intel, Marvell and Lam Research were among the names near 17 to 22 on Thursday’s close. Oversold only means the move was fast. It does not say the selling is over, and a stock can stay oversold for days.
What to watch next
- Tuesday, November 10: October CPI at 8:30 a.m. ET (7:00 p.m. IST). Forecasts are for a cooler monthly reading than September’s +0.6%. Our [CPI preview] has the numbers, and [What is CPI?] explains the terms.
- Wednesday, November 11: US bond markets close for Veterans Day. Stock markets stay open.
- Oil and yields: Both swung the market this week. Oil fell more than 8% on Wednesday toward $95, and the 10-year yield sat near 4.85%.
- Washington: eToro’s Lale Akoner expects midterm gridlock to keep policy risk alive, with data centers among the most exposed sectors.
- December 8 to 9: The next Fed meeting.
The takeaway for traders
A 5% index drop in a day is rare, so size matters more than direction. If you trade NQ or ES futures, check your contract count against your daily loss limit before the next high-impact release.