Nasdaq Enters Correction as AI Regulation Fears Grip Markets

Wall Street suffered one of its worst sessions in nearly two years on Thursday. The Nasdaq Composite plunged 5.52%—its steepest single-day drop in 19 months—officially entering correction territory.

The selloff was driven by fears of tighter artificial intelligence regulation following a sweeping victory by Democrats in U.S. midterm elections, which gave the party control of both the House of Representatives and the Senate.

Semiconductor stocks bore the brunt of the decline:

• Nvidia shares fell more than 9%.
• The Philadelphia Semiconductor Index tumbled 8%.
• The tech-heavy Nasdaq 100 dropped 6.4%—its worst single-day performance in more than six years—erasing over $2 trillion in market value.

The broader S&P 500 sank 4.32%, while the Dow Jones Industrial Average lost more than 1,800 points.

Analysts say investors are rattled by the prospect of Democrats seeking to slow the expansion of AI data centers. Melissa Brown, global head of investment decision research at SimCorp, said:

“Investors appear to be recognizing that some newly elected members of Congress and governors are looking to slow the pace of AI infrastructure development.”

AI-exposed utilities, including GE Vernova and Constellation Energy, also fell sharply. The scale of the decline rivaled the market turmoil following President Trump’s “Liberation Day” tariff announcement in April 2025.

Source: Yahoo Finance – US tech stocks plunge on fears of tighter AI regulation by Democrats