Wall Street faced a significant downturn as a massive selloff in artificial intelligence-linkked stocks drove the S&P 500 down 3.9%. The Nasdaq composite fell 5.2%, officially entering a correction phase as major chipmakers like Nvidia and AMD saw sharp declines.
The doublle-digit tumble of AMD and Nvidia
The semiconductor sector experienced a violent contraction, led by a 15.5% plunge in Advanced Micro Devices (AMD) and an 8.7% drop in Nvidia. As reported by the source, Nvidia's market weight is so significant that a mere 1% fluctuation in its price exerts more influence on the S&P 500 than almost any other U.S. equity. This volatility extended to specialized firms as well; CoreWeave, a cloud-based AI chip rental provider,saw its value slide by 12.5%, while GE Vernova, a key player in powering data centers, fell 7.7%.
The breadth of the selloff was notable, as every single sector within the S&P 500 lost ground. Even high-performing outliers like AppLovin, which surged 28.5% on strong earnings and a $3.6 billion stock buyback program, were unable to offset the massive losses in the technology-heavy sectors.
Democratic midterm victories and the data center pause
The recent U.S. midterm elections have introduced new political variables into the artificial intelligence growth narrative, according to the report. With Democrats securing nationwide victories, market participants are bracing for the possibility of increased regulatory scrutiny or even mandated pauses in the construction of new data centers.
This political shift comes at a time when the industry is already grappling with the high cost of borrowing, which has fueled long-standing worries about the sustainability of the massive infrastructure buildout required for AI. A slowdown in construction would directly impact the demand for AI chips, electricity, and the various services currently driving much of the U.S. economy's growth.
An echo of the April 2025 tariff shock
This sudden market instability draws parallels to the volatility witnessed in April 2025, following President Donald Trump's announcement of "Liberation Day" tariffs. As the report notes, the S&P 500's 3.9% decline is currently tracking toard its most severe drop since that period of global market upheaval.
The contagion was not limited to American exchanges. South Korea's Kospi index tumbled 5.3%, and Japan's Nikkei 225 fell 1.8%, illustrating how deeply integrated the AI-driven tech cycle has become within global indices.
Will the Iran conflict stabilize Brent crude at $98?
Significant uncertainty remains regarding whether the current movement into U.S. Treasury bonds is a permanent flight to safety. While the 10-year Treasury yield eased to 4.83% from a recent high of 5.30%, the motivation behind this shift remains unclear. Investors are weighing several unverified risks, including the potential for the war with Iran to disrupt global energy supplies and drive Brent crude oil—which recently rose to $98.03—even higher.
It also remains to be seen if the Bank of England's decision to raise interest rates for the first time in three years will successfully stabilize inflation amidst these geopolitical tensions. The central bank has indicated that its future moves will hinge largely on the resolution of the conflict in the Middle East.
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