What moved
The S&P 500 fell 4.36% to 7,353.73, the Nasdaq Composite 5.52% to 24,315.00 and the Dow 3.44% to 51,523.06. The Nasdaq is now 12.29% below its 52-week high, past the 10% line that defines a correction.
Europe closed before the US lows, so it was only grazed: the FTSE 100 finished 0.43% lower at 10,782.66 after an early rally faded, the DAX lost 0.43% to 26,325.01 and the CAC 40 gained 0.34% to 8,205.37. Asia split earlier in the day along chip lines. The Kospi (5,383.80) and Nikkei (61,077.90) closed lower, while the Hang Seng (24,796.98) and Shanghai Composite (3,689.91) closed higher.
Why
The Democrats' capture of both chambers of Congress went from relief on Wednesday to a problem on Thursday. Hundreds of newly elected candidates have pledged to curb data centres, and rising electricity bills have made the build-out a political target. The fear is that AI infrastructure becomes slower and costlier to build. Mixed results from Qualcomm, down 9.49%, and Arm, down 13%, added to the pressure. The Philadelphia semiconductor index lost about 12%, with Nvidia down 9.26%, AMD 17.26%, Micron 17.46% and Sandisk 22.26%.
That explanation fits the direction better than the scale, because no new law arrives overnight. Nomura's Charlie McElligott blamed hedge funds locking in gains on 2026's momentum trades before year-end, rather than weaker fundamentals. Doubts were also already building: an AI-spending scare hit tech on 30 October, and lenders have been demanding higher yields from heavily indebted data-centre builders.
Oil rose on its own story. Brent is trading at $99.00, up 4.63% but still 15.84% lower over five days, after a tanker struck a mine near Hormuz and no US-Iran deal emerged. In Asia, chip fears hit Korea and Japan. Tencent and Alibaba led Hong Kong without a clear single catalyst, and Toyota's 16.68% jump on a raised forecast shows how far the selling was confined to one theme.
Sentiment & risk appetite
The VIX closed at 28.18, up from 16.61 on Wednesday, while the MOVE index of bond volatility is at 97.92. By PrimerIQ's count, US decliners beat advancers 5,125 to 1,023, so this went well beyond chips. Dispersion still points to the source: the technology ETF lost 8.0% against 0.59% for communication services, and energy fell 2.98% even as crude rose.
Havens gave modest comfort. The 10-year Treasury yield ended 5.7 basis points lower at 4.837% and the 5-year 8.1 basis points lower at 4.608%. Gold is up 0.65% at $4,099.50 and the dollar index is little changed at 101.607. Bitcoin's 5.74% fall to $75,789.51 fits the flight from speculative assets.
Economic calendar
US data were strong and made little difference. Initial jobless claims fell to 189,000 in the week to 31 October, against a 196,000 forecast. Third-quarter productivity rose at a 3.6% annualised rate, and unit labour costs fell 0.7% against an expected 0.6% rise. Challenger counted 43,994 announced job cuts in October, down 71% from a year earlier. Traders' odds of a December Fed rate rise slipped to 70.1% from 82.7% on Wednesday.
The Bank of England raised Bank Rate by 25 basis points to 4% on an 8–1 vote, with Catherine Mann wanting 4.25%. It blamed Middle East energy costs and expects inflation of about 5% by the second quarter of 2027. Sterling is trading at $1.3449, up 0.11%. The next test is US October payrolls at 08:30 ET (13:30 GMT) on Friday, with a Reuters poll looking for 65,000 jobs after 29,000 in September and unemployment steady at 4.2%.
Earnings
Good results could still win a reward: AppLovin rose 31.04% in the regular session after its third-quarter report. After the close, Cloudflare jumped more than 17% in extended trading on revenue of $782.5 million against $736.8 million expected, plus a guidance raise, while Airbnb gained 5.8% after revenue of $4.87 billion, a higher full-year outlook and a buyback of up to $12 billion. Microchip also beat, posting $0.97 a share against $0.82 expected, but extended-hours moves are thinly traded and can reverse by the open.