Wall Street had one of its worst days in years on Thursday, November 5, as a selloff in artificial intelligence and chip stocks wiped out the market’s post-election rally. The NASDAQ Composite plunged 1,421.52 points, or 5.5%, to 24,315, its worst day in about a year and a half, and closed in correction territory, as much as 14% below the record it set just a month earlier. The S&P 500 fell 334.89 points, or 4.4%, to 7,353.73, and the Dow Jones Industrial Average dropped 1,833.06 points, or 3.4%, to 51,523.06. Small companies weren’t spared: the Russell 2000 also lost 4.4%.
The rout came just two days after Democrats won control of both the House and the Senate in Tuesday’s midterm elections. Stocks first cheered the result, with the Dow jumping 3% on Wednesday, its best day after a midterm since 1982. But by Thursday, investors had turned to what a Democratic Congress might mean for the massive AI data center buildout that has powered the market for the past three years. The Dow’s Thursday drop was its worst second trading day after a midterm election since 1896.
Chip stocks took the hardest hit. The Philadelphia Semiconductor Index fell 12.25%, its second-biggest one-day drop on record. Micron, AMD and Marvell each fell about 17%, SanDisk fell 22%, and Broadcom lost 10.4%. Chip-equipment makers Lam Research and Applied Materials are now down 36% and 30% over the past month. The Nasdaq-100 alone lost about $2.3 trillion in market value in a single session.
The Magnificent Seven all dropped. Tesla led the way down, falling 10.8% on merger and regulatory worries tied to Democratic gains. Nvidia, the face of the AI boom, dropped 9.3%. Meta fell 4%, Microsoft 3.6%, Alphabet and Amazon about 2.2% each, and Apple 1.5%, the smallest loss of the group. Software names that had been AI winners, including Palantir and CrowdStrike, were down more than 10% at their lows.
Fear spiked across the market. The VIX volatility index, Wall Street’s “fear gauge,” jumped more than 65% to above 27, its biggest one-day jump in more than two years. Individual investors sold about $358 million in stocks, on pace for their heaviest selling day since the COVID crash of March 2020, according to Vanda Research, with “no signs of buying the dip.” Some strategists, however, saw the selloff mainly as hedge funds locking in big 2026 gains before year-end rather than a sign the economy is breaking down. Nomura’s Charlie McElligott described it as “shooting the generals.”
Bonds and gold drew money as investors moved to safety. Treasury yields fell, especially for short-term notes, which dropped about 12 basis points, while the 10-year yield eased to around 4.9%. Traders also pushed back their expected timing for the Federal Reserve’s next rate increase to March. Gold rose about 1%, to above $4,000 an ounce. Bitcoin was savaged, down more than $4,000 on the day, hovering just below $76,000 late Thursday night.
Oil moved the other way, ending 3% to 4% higher after an 8% plunge on Wednesday, when the Democratic wave raised hopes for a diplomatic deal with Iran. Brent crude settled near $98 a barrel and U.S. crude near $90, as uncertainty over U.S.-Iran talks kept traders on edge.
For the week, the S&P 500 is down 3% and the NASDAQ 4.4%. The Dow has lost less than 0.5% since last Friday's close. The S&P 500 is still up 7.4% for the year, down from more than 11% just two weeks ago. NASDAQ and S&P futures were bouncing back early Friday, but all eyes are on the October jobs report this morning, which could decide whether Thursday was a one-day panic or the start of a deeper slide.
Stock futures were split heading toward the 8:30 am ET release of the BLS Non-farm Payroll data for October. Dow futures were down nearly 500 points, the S&P was holding around +15, and the NASDAQ futures sported a gain of close to 400 points.
Reaction to the October employment figures was muted. Stock futures barely budged, though all were trending marginally lower. There are obviously larger issues afoot.
Total nonfarm payroll employment rose by 165,000 in October, and the unemployment rate changed little at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services, in health care, and in transportation and warehousing.
Total nonfarm payroll employment rose by 165,000 in October, higher than the average monthly gain of 48,000 over the prior 12 months. In October, employment increased in professional and business services, in health care, and in transportation and warehousing.Employment in professional and business services increased by 70,000 in October, well above the average monthly gain of 15,000 over the prior 12 months. In October, employment continued to trend up in professional, scientific, and technical services (+33,000), in administrative and support and waste management and remediation services (+28,000), and in management of companies and enterprises (+9,000). Professional and business services has added 269,000 jobs since a recent low in October 2025.
Health care added 42,000 jobs in October, higher than the average monthly gain of 31,000 over the prior 12 months. In October, employment gains occurred in hospitals (+16,000), home health care services (+11,000), and outpatient care centers (+5,000).
In October, transportation and warehousing added 25,000 jobs, reflecting growth in couriers and messengers (+17,000) and air transportation (+4,000). Transportation and warehousing has added 104,000 jobs since a recent employment low in February, with couriers and messengers (+71,000) contributing most of the gain.
Manufacturing employment continued to trend up in October (+19,000) and has increased by 101,000 since a recent low in December 2025. In October, job gains occurred in computer and electronic product manufacturing (+7,000), machinery manufacturing (+4,000), and primary metal manufacturing (+4,000).
The strong employment data suggests that the economy is on solid ground, giving the Fed more than enough wiggle room to raise the federal funds rate by 25 or even 50 basis points at the December 8-9 FOMC meeting in their fight against inflation, prompting more worry than relief among investors.
On the heels of Thursday's across-the-board bloodbath, the market could use a bit of a breather. Prospects for a relief rally seem slim, given the changes in the political winds since Tuesday. Response to the election results were initially positive given Wednesday's rally, but turned downright nasty on Thursday. The abrupt turnaround was likely due to institutional money squeezing shorts on Wednesday and taking profits on Thursday. The stock market has been floating on clouds most of the year, now the rain is falling and the storm only seems to be beginning.
Days and weeks ahead should offer more perspective. The NASDAQ entered correction territory on Thursday, and the losses on the other major indices were sharp, signs that money was moving at an advanced clip away from the most popular - and profitable - sectors. Further rotation is likely as sentiment has turned somewhat sour.
Debt-strapped companies suffering stress in the form of declining margins, lower revenue and/or EPS short of expectations will be in focus for the remainder of the year and into the first half of 2027. Th sheer number of companies labeled "zombie" could exacerbate any downtrend. It will be instructive to see how full year and fourth quarter earnings stack up in January, but that's a story for another day. For now, markets are still digesting the election results and fleshing out investment strategies. To claim that the environment is challenging would be a measured understatement.
A frantic Friday trade may offer some glimpse of what's ahead for the rest of the month, but, with the holiday season fast approaching, there may just be enough positive vibes to keep the wheels from falling off completely.
At the Close, Thursday, November 5, 2026:
Dow: 51,523.06, -1,833.06 (-3.44%)
NASDAQ: 24,315.00, -1,421.52 (-5.52%)
S&P 500: 7,353.73, -334.89 (-4.36%)
NYSE Composite: 23,955.98, -730.15 (-2.96%)
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