Nasdaq on track for a correction as AI-spending doubts hit tech stocks

Explain terms

What happened

The Nasdaq Composite fell nearly 4% to 24,712.60 Thursday morning, more than 10% below its Oct. 6 record close of 27,599.89, putting it on track to confirm a correction if it closes there, Reuters reported in a story updated at about 9:48 AM CT. Quotes on the same page showed the Nasdaq 100 (a different, narrower index) down about 5.7%, the S&P 500 down about 3.4% and the Dow down about 2.3%; those quotes carried no timestamp and may lag. The Cboe Volatility Index (VIX), Wall Street's "fear gauge," was up about 60% on the same quotes.

Chip and AI stocks led the drop: SanDisk was down about 20%, AMD and Micron about 15%, Tesla about 10%, Nvidia about 8% and Meta about 7%, per those quotes.

Earlier this morning, Nasdaq 100 futures were already lower as chip stocks fell and Qualcomm slid about 9% in early trading after its smartphone chip sales missed estimates, Reuters reported. Our Morning Brief has the overnight details.

What we know / what we don't know yet

Reuters tied the selloff to worries about heavy AI spending and tighter scrutiny of data-center expansion, with big tech companies borrowing heavily to fund data centers and chips while investors question how quickly that spending turns into profit. Reuters also said Democrats' sweep of both houses of Congress raised the prospect of more scrutiny of the AI infrastructure buildout, and that last month's Alphabet and Meta results did not reassure investors on AI returns.

A change from one party's full control of government to the other's "can also represent quite a bit of uncertainty" in policy.^{Sameer Samana, Wells Fargo Investment Institute}

What we don't know yet: whether this is one sharp day of repositioning or the start of a longer reset in AI stocks. No single new headline explains the size of the move after the open; it looks like this week's worries piling up at once.

The market reaction so far

Nasdaq 100: down about 5.7% (Investing.com quote, not timestamped).
S&P 500: down about 3.4%; Dow: down about 2.3% (same quotes).
Gold: up about 1% near $4,115 an ounce on the same quotes.
Treasury yields were slightly lower on the day, with the 10-year near 4.84% (same quotes).
Oil was higher: Brent near $97 a barrel, according to Yahoo Finance's live coverage.

What happens next

Friday's October jobs report is due at 7:30 AM CT.
We'll have the full picture, with closing numbers and why it moved, in tonight's Close.

The short version (the what and the result)

The Nasdaq Composite fell more than 10% below its Oct. 6 record, on track to confirm a correction, as AI-spending doubts hit chip and big tech stocks.
The Nasdaq 100 was down about 5.7% and the S&P 500 about 3.4% mid-morning; chipmakers like AMD and Micron fell about 15%.
Gold rose about 1%.
Next up: tonight's Close, then Friday's jobs report at 7:30 AM CT.

What happened

What we know / what we don't know yet

The market reaction so far

What happens next

Sources