US stocks suffered a sharp selloff on Thursday, November 5, 2026, as investors reassessed the outlook for artificial intelligence companies following Democratic victories in the midterm elections. The Nasdaq Composite dropped 5.52%, its steepest daily fall in 19 months, according to Reuters.
How far did US stocks fall?
The technology-heavy Nasdaq lost 5.52%, while the S&P 500 declined 4.36% and the Dow Jones Industrial Average fell 3.44% on Thursday. Reuters reported that the Nasdaq also entered a technical correction, meaning it had fallen at least 10% from its October 6 closing high.
The selloff marked a dramatic reversal from Wednesday’s post-election rally. The Associated Press reported that the Dow had surged 1,569 points, or 3%, on November 4 as oil prices fell and investors digested the election outcome.
Why were AI and chip stocks hit hardest?
Semiconductor shares led the downturn. Reuters reported that Nvidia fell more than 9%, while the Philadelphia Semiconductor Index dropped more than 12%. Qualcomm also came under pressure following weaker-than-expected fourth-quarter chip sales estimates.
Investors have spent months debating whether enormous spending on AI data centers, chips and related infrastructure can translate into sustainable profits. Thursday’s decline reflected a fresh concern: Democratic control of both chambers of Congress could increase scrutiny of AI infrastructure, data centers and industry regulation.
That possibility is not the same as an enacted law. The election results changed expectations about future policy, but the details and timing of any new restrictions remain uncertain. Market prices can react to anticipated developments well before lawmakers propose or approve legislation.
What changed after the midterm elections?
Democrats won majorities in the US House and Senate in the November 3 elections, according to Reuters’ market analysis. The shift creates the prospect of more congressional oversight and policy disputes with President Donald Trump’s administration.
However, election outcomes are only one of many factors shaping share prices. Corporate earnings, borrowing costs, oil prices and expectations about economic growth remain important. The November 5 plunge followed a strong rally just one day earlier, underscoring how quickly market sentiment can reverse.
What should investors watch next?
The immediate questions are whether semiconductor stocks stabilize, whether technology-company earnings justify current valuations, and whether Congress advances specific proposals affecting AI development. Investors will also watch bond yields, inflation data and the Federal Reserve’s next signals.
A correction does not automatically mean a recession or a prolonged bear market. It describes the size of a decline from a recent peak, not its eventual duration. Readers looking for background on market volatility can consult NewsNationOnline’s guide to the VIX fear index.
For context on earlier AI-driven market movements, see our reports on Intel’s October selloff and the late-October AI stock rally.
Sources: Reuters, November 5, 2026; Associated Press, November 4, 2026. Market figures reflect the November 5 closing session and may change in subsequent trading.
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