US Stock Market Crash: The threat that was heard in the American stock market (Wall Street) for the last several months proved true on Thursday. As soon as the market opening bell rang on the New York Stock Exchange, there was such a storm of selling that the entire market was shaken. This downward trend deepened as the day progressed. The situation was such that stocks from high-profile chipmaker Nvidia to safe-haven Walmart tumbled.
The biggest blow of this devastation fell on companies that were at the center of the artificial intelligence (AI) boom. In the same year, these companies took the market to new record levels one after the other. However, there was also a nagging fear that this was a bubble that could burst at any time. Thursday saw a sudden rush of exits among investors. By the end of trading, the Nasdaq 100 index was down more than 6 percent. This is the biggest drop since the Covid-19 pandemic in March 2020. In this one-day decline, $2.3 trillion in market value was wiped from the Nasdaq.
Big companies have run out of steam
Tech stocks have been worst affected by this market tsunami. The Nasdaq, the main index of American tech companies, fell about 6 percent. Apart from this, the S&P 500 was down 4 percent, while the Dow Jones was also down 3 percent. Surprisingly, the semiconductor index fell by around 11 percent. This is the biggest decline in the semiconductor sector since March 2020.
Shares of Nvidia, the world’s most valuable company, fell more than 9 percent. This is the company’s biggest decline since January 2025. This one setback has ruined the entire growth of the company this year. Market conditions were so bad that shares of all 30 companies included in the Dow Jones Industrial Average fell. At the same time, the S&P 500 fell 4.4 percent.
The Philadelphia Semiconductor Index (SOX), which tracks chip companies, fell 12 percent. It includes big companies like Nvidia, Intel, Advanced Micro Devices (AMD). This has been his worst day since the start of the pandemic. From its June 22 peak, the index has now fallen more than 38 percent and entered a bear market. The Russell 2000 index of smaller stocks also fell 4.5 percent and entered a correction zone.
Why is the market afraid of the victory of the Democratic Party?
The main reason behind this sharp fall in the market is the huge victory of the Democratic Party in the US Congress elections. Investors fear that this political shift will lead to stricter policies, which could put the brakes on the rapid pace of the AI industry. So far, hundreds of billions of dollars have been invested in computer equipment in this field.
Voters upset by high gas prices and the impact of AI data centers being built in places like Texas have hit President Donald Trump’s Republican Party. Markets rose in early reaction on Wednesday. At the time, investors felt that separation of powers in Washington would limit Trump’s power. Also, the ongoing war in Iran will end soon, which has pushed up interest rates along with inflation. But on Thursday, the direction of the wind changed.
The data center has run into trouble due to opposition
In fact, AI technology requires large data centers to run. For some time now, there has been a lot of opposition at the local level regarding the construction of this new data center. There are three main reasons behind it. The first reason is the rapidly increasing consumption of electricity, due to which the burden on the common man is increasing. Another major issue is the heavy consumption of water, which is directly raising serious environmental issues.
Due to this opposition, investors now fear that investment in AI infrastructure may slow down in the coming days. AI companies have already invested billions of dollars in anticipation of future profits. If the government’s strictness increases, the earnings of these companies will be directly affected. This fear created a selling environment in the market.
Who did Trump blame?
US President Donald Trump has also reacted strongly to this carnage in the stock market. Posting on his social media platform ‘Truth Social’, he directly blamed the election results for the decline. Trump wrote that the stock market had one of its worst days in history because of the election results. It is very sad to see this.
Trump went on to write in his post that it took a lot of work to take the market to a level that no one had seen before, but now it has happened. He warned ordinary Americans that the decline has also reduced the money in your 401(k) or retirement fund. “Remember, this is not because of the Republicans, but because of the ‘Democrats,'” Trump quipped.
Memories of the 2008 recession came back
Greg Taylor, chief investment officer at Penderfund Capital Management, said the decline was reminiscent of the 2008 housing crisis or the bursting of the 2001 Internet bubble. According to him, the entire focus of the market was on only one theme (AI). It had become a huge part of the market, so it had to be broken.
The VIX, an index measuring fear in the market, rose 11.57 points to close at 28.18, its highest level since March. Amid rumors of hedge funds selling their positions, investors turned to government bonds (Treasuries) as a safe haven. Momentum Trading The iShares MSCI USA Momentum Factor ETF fell 8.2 percent, its worst day since 2020. Michael Monaghan, the ETF’s founding partner, said the big funds have refrained from buying, while smaller hedge funds (pod shops) have been forced to sell all their positions.
A basket of unprofitable tech companies (such as Roku, Peloton) fell 7.7 percent, according to Goldman Sachs data. At the same time, shares of weak companies with heavy debts also fell by about 4 percent. Eric Ditton, president of the Wealth Alliance, says the backlash against data centers could hurt companies’ earnings. That is why they are now taking a cautious approach and investing money in energy stocks to avoid expensive oil.
