A sweeping selloff led by technology stocks on Wall Street Thursday erased almost $3 trillion from the market value of companies in the S&P 500. Investors responded to intensifying concerns over increased artificial intelligence spending, tighter regulations, and the outlook for corporate performance in the sector.
Global markets track US declines
The Nasdaq Composite dropped 5.52% to close at 24,315, marking its most severe one-day loss in 19 months and driving the index into correction territory. The S&P 500 fell 4.36% to 7,353.73, while the Dow Jones Industrial Average declined 3.44% to end at 51,523.06. Chipmakers suffered the most, with the Philadelphia Semiconductor Index retreating by more than 12%.
Selloffs quickly spilled over to Asia and Europe. Japan’s Nikkei 225 slumped 6% on Friday and South Korea’s Kospi dropped 6%, with semiconductor names at the forefront of the declines.
In Europe, the DAX index in Germany opened down 2%, while the UK’s FTSE 100 shed 1.9% in early trading.
Recent Democratic wins in the US midterm elections, which brought both chambers of Congress under party control, have sparked debate about potential regulatory reforms that could affect the technology industry.
| Index | 1-Day Change | Closing Level |
|---|---|---|
| Nasdaq Composite | -5.52% | 24,315 |
| S&P 500 | -4.36% | 7,353.73 |
| Dow Jones Industrial Average | -3.44% | 51,523.06 |
| Philadelphia Semiconductor Index | -12% | N/A |
| Nikkei 225 (Japan) | -6% | N/A |
| Kospi (South Korea) | -6% | N/A |
| DAX (Germany) | -2% | N/A |
| FTSE 100 (UK) | -1.9% | N/A |
Market analysts have drawn comparisons to the dot-com bubble at the turn of the millennium, as the current pace of AI-driven growth now raises concerns that valuations may have run ahead of business fundamentals.
AI boom’s risks, regulatory fears and market parallels
Investors are particularly wary that greater regulatory scrutiny, restrictions on electricity usage, and local resistance to new data center projects could hinder infrastructure growth crucial to the ongoing artificial intelligence surge.
The dot-com bubble, which peaked in March 2000, saw technology stocks soar on the back of expected future growth rather than sustained earnings. The Nasdaq then lost nearly 78% of its value by October 2002, resulting in trillions of dollars in lost market capitalization.
Jim Cramer’s perspective on the selloff
Jim Cramer, host of CNBC’s “Mad Money,” emphasized that technology shares—particularly semiconductor companies—remain at risk and the correction may not be complete. Cramer noted that while the current downturn echoes fears from the dot-com era, the context is fundamentally different since today’s leading technology companies largely report strong profits but their stocks had become excessively valued.
“Unlike 2000, these are mostly lucrative companies with stocks that went too high,” Cramer pointed out, adding that debt exposure among neocloud providers such as CoreWeave and IREN could pose additional risks if funding challenges arise.
Cramer expressed preference for a sharper, shorter correction instead of a prolonged downward drift, suggesting that having liquidity in this environment helps investors avoid panicked decisions.
“If you have cash you won’t panic. You won’t be complacent, either. You will be clear-headed and that’s how you will lose less money until things get better. They always do,” Cramer advised viewers.
Despite Thursday’s rout, Nasdaq-100 futures saw some recovery the following day, even as the Dow’s outlook remained negative, offering a tentative sign that the market panic might be calming.
Mini dictionary: CoreWeave and IREN are cloud infrastructure providers focused on high-performance computing and AI workloads, offering specialized infrastructure for enterprises using artificial intelligence and blockchain technologies.
