Stock Market Today Is Nothing Like Yesterday, Nasdaq Lost $2.5 Trillion in a Single Day
One of those sessions that seems different when you watch it live was Thursday. Not because markets don’t fall—they do, on a regular basis—but rather because of how quickly the story changed. The Nasdaq fell 5.5% by the end, losing about $2.5 trillion in market value. The S&P 500 ended the day down 4.36%. Over 1,800 points were lost by the Dow. Those are figures that hold true for a single trading day.
In general, the US midterm elections served as the catalyst. In what most observers described as a decisive outcome, Democrats swept both chambers of Congress. And markets began calculating what that might mean for AI somewhere between Tuesday night’s vote tallies and Thursday’s opening bell.
The issue is not wholly abstract. Data center construction was the target of dozens of ballot initiatives nationwide. Texas, which had developed into a sort of center for AI infrastructure, went blue because its incoming governor had specifically opposed the construction of new data centers during his campaign. This was not the scenario that investors had been modeling for the previous two years, when they were pricing in an unbounded world of AI expansion.
AMD and Micron both fell more than 17%, while Nvidia fell more than 9%. Together with Musk’s other business endeavors, Tesla lost almost 11% of its market value—more than $300 billion. The damage continued to spread throughout Asia on Friday, with South Korea’s KOSPI falling by a comparable amount and Japan’s Nikkei falling by about 6%. One of the biggest memory chip manufacturers in the world, SK Hynix, saw a decline of more than 10% in Seoul. It’s almost disorienting to watch a selloff travel time zones like this.
Whether Thursday’s action was a significant overreaction to political unpredictability or a correction of actual substance is still up for debate. When it comes to midterms, market history tends to favor the latter. The S&P 500 has not dropped 12 months after a midterm election since 1938, according to Fifth Third Wealth Advisors, with gains of almost 15% on average in the subsequent year. That is a valid counterargument. The AI infrastructure story is shifting from a discussion about chips and software to one about electricity, zoning, and local politics, though this cycle may differ in one particular way. That fight is messier and slower.
Early indications of stabilization, or at least partial stabilization, were present by Friday’s premarket. S&P 500 futures moved slightly higher as Nasdaq 100 futures increased by more than 1%. The Dow continued to decline. On November 6, traders on the prediction platform Polymarket priced in a 62% chance that the S&P 500 would open higher. It’s an intriguing number. It’s intriguing, but not exactly comforting.
In the meantime, a few individual stocks were experiencing truly positive days amid all the macro noise. Airbnb was trading almost 12% higher in premarket on Friday after easily exceeding earnings estimates with $3.16 EPS compared to the $2.85 anticipated. Cloudflare increased by nearly 15% after releasing impressive quarterly results. Lam Research increased 10% after announcing a $25 billion buyback. These are actual businesses with actual outcomes. It’s simple to overlook them in a session where the index-level story takes center stage.
The tone will probably be set by the October jobs report, which is released prior to the opening bell. Oil prices have also increased; Brent crude has risen to $99.57 per barrel, adding to the already challenging morning due to geopolitical unrest surrounding Iran. Many things are coming at once. Not everything will be resolved by Friday’s market. However, it will likely provide investors with some insight into whether Thursday was a pivotal moment or simply a terrible day.
