Nasdaq drops 4% into correction territory
Archived — this story has rotated out of today’s deck. It is kept here in full.
The gist
The Nasdaq Composite fell more than 4% on Nov. 5, over 10% below its Oct. 6 record close.
The drop follows midterm wins by Democrats, raising doubts about the AI data-center buildout.
Background
The Nasdaq Composite is the tech-heavy U.S. stock index, and a correction means a fall of more than 10% from a recent peak. It had closed at a record on Oct. 6, then slid after the Nov. 3 midterm elections, in which Democrats flipped control of the House and Senate and won several governorships. Investors are pricing in tougher scrutiny of the power-hungry data centers behind the AI trade under the new Democratic majorities, and chip stocks led the selling.
How it unfolded
- Oct 6, 2026The Nasdaq Composite closes at a record, the peak from which the correction is measured.
- Nov 3, 2026Midterm elections: Democrats flip control of the House and Senate and win a slew of governorships.
- Nov 4, 2026The Dow gains more than 1,500 points, or 3%, its best day since April 2025; the S&P 500 rises 1.6% and the Nasdaq 1.44%.
- Nov 5, 2026The Nasdaq falls more than 4%, entering correction territory, more than 10% below its Oct. 6 record close; the S&P 500 and Dow also drop, erasing most of the prior day's gain.
- Nov 5, 2026Chip stocks lead the rout: the iShares Semiconductor ETF falls as much as 11%, Nvidia and Broadcom each 6% to 7%, AMD 12%, SanDisk more than 15%; in South Korea, Samsung Electronics drops 7.5% and SK Hynix 9.5%.
- Nov 5, 2026OpenAI publishes data center commitments, including paying for all electricity and infrastructure used at its facilities.
Key terms
- correction
- A stock index decline of more than 10% from its recent high, typically shorter and sharper than a bear market.
- midterm
- US general elections held near the midpoint of a president's four-year term, when all House seats and about a third of Senate seats are contested.
- capex
- Money a company spends to buy, maintain, or improve its long-term fixed assets.
Source: Wikipedia
Who’s saying what
- Analysts
- Tim Holland of Orion says investors are stepping away until they get a better sense of the midterms' implications for the AI capex cycle.
- Analysts
- Keith Buchanan of Globalt Investments calls the prior day a relief rally and says investors are disappointed in Qualcomm earnings and rotating away from AI.
- Analysts
- Jay Hatfield of Infrastructure Capital Advisors calls it a true panic driven entirely by chip stocks and a potential slowdown in the AI trade.
- Analysts
- Jordan Watson of Tandem Investment Advisors expects more volatility as investors digest the election results and potential policy implications.
- Public
- Sen. Bernie Sanders of Vermont has called for a national data-center moratorium, and Gina Hinojosa, the Democrat elected governor of Texas, has called for ending data center development in the state.
Still unverified
Reports differ on the size of the moves: the Nasdaq decline is given as 3.9%, 4%, 4.8%, 4.85% and 5.4%; the Dow loss as 1,153, 1,200, 1,220 and 1,711 points; and the S&P 500 as 2.8%, 3.2% and 4%. CNBC reports the iShares Semiconductor ETF's 11% drop "would mark" its steepest one-day fall since March 2020.