• U.S. stocks plunged Monday, with the S&P 500 down 4.1%, the Nasdaq Composite down 5.4%, and the Dow Jones Industrial Average down 3.2%, as an AI-led selloff intensified and spread across all 11 S&P 500 sectors.
  • Semiconductor shares bore the brunt, with the Philadelphia Semiconductor Index falling as much as 11%, its worst intraday drop since March 2020, amid disappointing earnings and concerns that election results could slow data-center development.
  • Investors fled risk assets, driving demand for Treasuries, as analysts warned that tighter financing conditions could further pressure AI infrastructure spending.

Broad Selloff Hits All Sectors

The decline, which accelerated by midday, erased gains from the post-election rally and extended a technology downturn that began in early October. By 12:09 p.m. EST, all 11 S&P 500 sectors had turned negative, according to Bloomberg data. The information-technology sector led losses, down about 6%, while the Nasdaq 100 fell 5%.

Semiconductors were at the epicenter. The Philadelphia Semiconductor Index tumbled as much as 11%, with AMD (NASDAQ:AMD), Micron (NASDAQ:MU), and Marvell (NASDAQ:MRVL) among more than a dozen large tech names posting double-digit percentage declines. Nvidia (NASDAQ:NVDA), the largest drag on the S&P 500, fell 8.3%, according to an Associated Press report. A U.S.-listed semiconductor ETF dropped 10%.

The selloff extended beyond chipmakers. CoreWeave (NASDAQ:CRWV), which rents access to AI chips through the cloud, plunged 14.9%, and GE Vernova (NYSE:GEV), a supplier of power equipment for data centers, slid 9.1%. Qualcomm (NASDAQ:QCOM) reported fiscal fourth-quarter revenue of $10.32 billion, down 8% year over year but above the $10.12 billion consensus, as handset sales fell 26%. Its shares fell sharply.

Election, Earnings, and AI Jitters Converge

Market participants pointed to a confluence of factors. Reports linked the decline to concerns that Democratic gains in Congress and governorships could lead to increased scrutiny or restrictions on data-center development, as well as the passage of ballot initiatives that may constrain construction. Disappointing semiconductor-related earnings added to the gloom.

"What institutional investors like us are really focused on is regulatory stability," said one analyst, speaking on condition of anonymity. "The election results introduce uncertainty about permitting and infrastructure requirements, and the market is repricing that risk."

Meanwhile, the outlook for returns on artificial-intelligence investment was already fragile. Reuters (NASDAQ:TRI) reported repeated AI-sector selloffs since the Nasdaq's October 6 record close, with weakness in both equity and debt markets making financing harder for some data-center developers. Analysts described a reinforcing cycle: high AI spending and weaker free cash flow increase financing needs; higher borrowing costs and falling share prices make that financing less attractive; a slower buildout then threatens suppliers' expected growth.

"This is an emotional sell-off," said Mark Hackett, chief market strategist at Nationwide, in an interview with Reuters. "Aggressive institutional selling and hedge-fund deleveraging are amplifying the decline." Other analysts emphasized a more fundamental reassessment of growth expectations and valuations.

Economic Data and Policy Uncertainty

The equity shock occurred alongside comparatively firm labor-market data. Initial jobless claims fell to 189,000, below expectations. Still, the political backdrop looms large. Investors are parsing what the election results mean for data-center development, with some analysts suggesting developers could respond to U.S. restrictions by locating projects in countries such as Canada or Brazil.

"The key uncertainty is whether the market is correcting excessive expectations or anticipating a sustained deterioration in AI investment returns," said one portfolio manager, who asked not to be identified. "Neither outcome is established."

Demand for Treasuries rose as money moved away from chipmakers, a sign that the equity adjustment was influencing other asset classes. The yield on the 10-year Treasury note fell, according to traders.

What's Next

Investors will watch whether selling stabilizes and whether new policy proposals materially restrict construction. Companies' spending and earnings forecasts are also in focus. The Nasdaq's intraday decline put it on pace for a correction—a closing decline of at least 10% from its peak—though an intraday breach alone does not establish the final outcome.

A spokesperson for the S&P 500 index provider did not respond to a request for comment. Representatives for Nvidia and AMD could not be immediately reached.

Correction: An earlier version of this article misstated the decline in the Philadelphia Semiconductor Index. It fell as much as 11%, not 10%.