US stocks tumble as semiconductor index sinks 11%; Nvidia, AMD lead tech sell-off

US stocks came under pressure on Thursday, November 5, as a sharp sell-off in artificial intelligence (AI) and semiconductor shares wiped out the gains from the previous session's post-election rally.

The tech-heavy Nasdaq Composite plunged 5%, while the Dow Jones Industrial Average tumbled 2.2%, or more than 1,200 points, as investors reassessed the outlook for technology stocks and the broader market following the Democrats' sweeping victory in the US midterm elections.

The S&P 500 declined 3.3%, while the Philadelphia Semiconductor Index (SOX) plunged 11%, reflecting the intensity of the sell-off across chipmakers. Shares of Nvidia, Micron and other semiconductor companies were among the biggest drags on the market, with investors pulling back from some of the technology stocks that had driven recent gains.

The decline marked a sharp reversal from Wednesday's rally, which had been fuelled by relief among investors that the uncertainty surrounding the midterm elections had passed. However, Thursday's trading showed that the removal of electoral uncertainty has not necessarily translated into a clearer outlook for markets, with investors now weighing the potential economic and policy implications of the change in political control.

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Chip stocks lead Wall Street lower

Selling pressure was particularly pronounced in semiconductor and AI-related stocks. Nvidia and AMD shares fell more than 6% and 13%, respectively, while Micron declined over 12% during the sell-off. The weakness also extended to data-centre stocks as investors reassessed the outlook for AI infrastructure spending and the regulatory environment under the new political landscape.

The Nasdaq had already been under pressure shortly after the opening bell, falling around 1%, while the S&P 500 slipped 0.3%. The Dow, meanwhile, initially gained 0.6%. However, selling gathered pace as the session progressed, with technology stocks leading the broader market lower.

At one point, the Nasdaq was down around 4%, the S&P 500 had declined 2.3%, and the Dow had shed more than 700 points. The subsequent losses deepened, with the Nasdaq's decline reaching 5%, putting the index on track to close in correction territory.

The semiconductor sell-off also erased an estimated $2 trillion in market capitalisation, reversing a significant portion of the gains recorded during Wednesday's post-election rally. Qualcomm was another notable laggard after its quarterly results, adding to the pressure on the technology sector.

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Oil rebounds as Iran war uncertainty persists

Away from equities, crude oil prices moved higher as uncertainty surrounding the prospects of a deal between the US and Iran to end the war in the Middle East continued to influence sentiment.

Brent crude futures traded around $97 per barrel, while US benchmark West Texas Intermediate (WTI) crude hovered near $90 per barrel. The rebound followed a sharp decline in oil prices during Wednesday's session.

Markets had found some optimism overnight after US Vice-President JD Vance suggested that the war was a factor behind the Republicans' election defeat. In a post on X, Vance said, "The reason we lost [the midterm elections] is the war", signalling that the party should push towards a resolution of the conflict.

However, uncertainty remains over whether President Donald Trump will pursue a deal with Iran and how quickly the conflict could be brought to an end.

For investors, the immediate focus remains on the sharp correction in technology and semiconductor shares, alongside the broader implications of the Democrats' election victory for US economic policy, corporate spending and market sentiment.