VIX jumps 40% as chip stocks lead a broad Wall Street selloff

The tech-heavy Nasdaq fell as much as 5% on Thursday, putting the index on course for its worst trading day in 18 months as investors anticipated tougher scrutiny of the artificial intelligence industry after the week’s midterm elections. Wall Street sustained widespread losses, with chip stocks leading the decline.

The Nasdaq composite tumbled into “correction territory,” meaning it was more than 10% below its recent record high. The index was on track for its largest one-day fall since Donald Trump announced his “liberation day” tariffs on US trading partners in April 2025.

The Guardian reported that worries over massive AI spending gripped the New York stock market and rippled through other bourses worldwide as investors anticipated tougher scrutiny of data-center expansion plans.

Analysts pointed to expectations that Democratic governors would clamp down on the rollout of new data centers after the party won a series of gubernatorial races that week. US voters also rejected data centers in local ballots across the country.

Chip stocks led the slump. Memory maker SanDisk tumbled 19%, while hard-drive maker Western Digital fell 16.5%. Nvidia, the chipmaker at the heart of the AI boom, was the top faller on the Dow Jones industrial average, down 6.7%, followed by Goldman Sachs at 5.7%.

Wall Street’s “fear index,” the VIX, jumped 40% to its highest level since the early weeks of the Iran war, a sign of rising market volatility. The Dow Jones industrial average, made up of 30 large US companies, was down more than 1,000 points, or 2%, in late-morning trading.

FRED lists the raw NASDAQ Composite value at 25,736.51 and the raw Dow Jones Industrial Average value at 53,356.12, each with an as-of date of November 5. Separately, The Guardian reported the Dow at 52,264 in late-morning trading after a 2% fall.

Neil Wilson, an investor strategist at Saxo UK, said a “complete capitulation level event” was playing out in tech stocks. “The fear is a total momentum unwind as Democrats pace the frontier and kibosh datacentre buildout … this looks totally overdone but the nature of ‘sell everything’ in this market means we need to look for some stability first,” Wilson said.

The selloff sharply reversed Wednesday’s rally, when Wall Street stocks posted their biggest daily gain in months as investors anticipated that the Democratic party’s success in the US midterm elections could restrain the White House.

Tech analyst Dan Ives said the election results were a clear sign that the pace of data-center buildout would begin to slow. “There is no way to sugarcoat that Democrats taking control, especially over the Senate, will create some major hurdles for AI and tech legislation in the Beltway over the next two years,” Ives said.

Outside the US, an early stock-market rally in Europe faded by late trading. Britain’s FTSE 100 closed down 46 points, or 0.4%, at 10,782.66.