A brutal sell-off for AI stocks sends Wall Street reeling, and the S&P
500 tumbles 4.4%
[November 06, 2026] By
STAN CHOE
NEW YORK (AP) — A brutal sell-off swept through Wall Street Thursday,
led by stocks tied to the buildout of AI data centers. The wipeout more
than erased the U.S. stock market’s gain from the day before, which was
its best in three months.
The S&P 500 fell 4.4% for its worst day since President Donald Trump
shook markets worldwide in April 2025 with his “Liberation Day” tariffs.
The Dow Jones Industrial Average sank 1,833 points, or 3.4%, while the
Nasdaq composite tumbled 5.5%.
The Nasdaq, which is full of AI-related and other tech stocks, sank
11.9% below its all-time high set last month. Stock geeks call a loss of
more than 10% a “correction.”
Stock markets around the world felt pressure from continued drops for
companies that had benefited from the boom in the
artificial-intelligence technology industry, and South Korea’s Kospi
index tumbled 5.3%. Such stocks have been swinging for months on worries
that the construction of further AI data centers may slow because of how
expensive it’s become to borrow money. Critics also said AI stock prices
had shot too high and were in a bubble.
Tuesday’s U.S. midterm elections added another challenge. The nationwide
victories for Democrats raised the possibility that governments could
force pauses in construction of more data centers. Voters across
political parties say they’re wary about AI and don’t like the increases
to power bills caused by data centers.
Any slowdown in construction of AI data centers would mean fewer
purchases of AI chips, not to mention electricity and other products and
services that are getting vacuumed up in the AI frenzy, which is driving
much of the U.S. economy’s growth.
Nvidia, the chip company that quickly became the face of the AI boom,
fell 9.3% and was by far the heaviest weight on the S&P 500. It’s now
down 2.6% for the year so far following annual gains of roughly 39%,
171% and 239% in the last three years.
Advanced Micro Devices tumbled 17.3%. CoreWeave, a company that rents
access to AI chips to customers over the cloud, fell 9.8%. GE Vernova,
which has been helping to power data centers, sank 7.5%.
Compounding the pain for investors, AI chip stocks are some of Wall
Street’s most influential because they’ve become some of the largest. A
1% move for Nvidia, for example, has more effect on the S&P 500 than a
1% move for nearly any other U.S. stock.
Thursday’s losses were broad after gains for the majority of stocks on
Wall Street during the morning quickly evaporated.
Among the handful of winners was AppLovin, which jumped 31% after the
marketing platform reported both revenue and profit that topped
analysts’ expectations. The company’s board also approved a program to
send up to $3.2 billion to investors by buying back its own stock,
bringing the program’s total potential value to $3.6 billion.
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Traders Drew Cohen, left, and Dylan Halvorsan work on the floor of
the New York Stock Exchange, Monday, Jan. 26, 2026. (AP
Photo/Richard Drew, File)
 Tapestry rallied 7.1% after the
company behind the Coach and Kate Spade brands likewise delivered a
stronger profit than expected. It also raised its forecasts for
revenue and earnings this fiscal year.
Stock prices tend to follow where corporate profits and interest
rates go over the long term, depending on them much more than on who
controls what in Washington.
All told, the S&P 500 fell 334.89 points to 7,353.73. The Dow Jones
Industrial Average dropped 1,833.06 to 51,523.06, and the Nasdaq
composite sank 1,421.52 to 24,315.00.
In other financial markets, the initial knee-jerk reaction to the
U.S. midterm election results faded a bit. The price of a barrel of
Brent crude oil rose 3.9% to $98.29 and recovered a chunk of its
nearly 9% drop from the day before. Uncertainty still reigns about
what will happen in the war with Iran and when the global energy
industry can return to normal.
In the bond market, Treasury yields continued to tumble. The yield
on the 10-year Treasury fell to 4.84% from 4.90% late Wednesday. It
had been at 4.95% on election night and above 5.30% last month. That
could be a signal that investors are herding into U.S. Treasury
bonds in search of something that’s safer to own as stock prices
tumble.
The drop in yields came despite some encouraging reports on the U.S.
economy. Fewer U.S. workers applied for unemployment benefits last
week. A separate report, meanwhile, suggested overall productivity
for U.S. workers improved by more during the summer than economists
expected. That could help the economy grow without adding pressure
to the nation’s high inflation.
In stock markets abroad, indexes were mixed in Europe and Asia.
Besides South Korea, Japan’s Nikkei 225 also felt the sting of drops
for tech and AI-related stocks and sank 1.8%.
London’s FTSE 100 dipped 0.4% after the Bank of England increased
its main interest rate for the first time in three years to help
limit high inflation.
The bank said its next moves on interest rates will largely hinge on
what happens with the Iran war, which sent oil prices and inflation
higher worldwide.
“We’ve seen encouraging news in the past 48 hours,” Bank Gov. Andrew
Bailey said at a press briefing. “The best thing that can happen is
to resolve the conflict in the Middle East; there’s no question
about it.”
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AP Business Writer Elaine Kurtenbach contributed to this report.
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