Dow plunges 1,200 points, Nasdaq into correction territory after midterm results stock rally

The Dow Jones Industrial Average plunged about 1,200 points on Thursday, eroding most of the rally from a day earlier when midterm election results propelled the index to its best trading session in more than a year.

The S&P 500 dropped 3.2%, while the tech-heavy Nasdaq fell 4.8%, putting the index into correction territory, meaning it has fallen more than 10% from a previous peak last month.

The Dow declined 1,220 points, or 2.2%.

The selloff hammered many artificial intelligence firms as investors appeared to digest risk for the sector posed by newly empowered Democrats, many of whom ran campaigns critical of artificial intelligence data centers.

Nvidia, the chipmaking giant behind many of the semiconductors used in AI products, dropped 7% on Thursday. Rival chipmaker Advanced Micro Devices saw shares fall 12%. SanDisk, another AI hardware firm, plummeted more than 15% in value.

The slide also hit some other major tech firms behind AI development.

Microsoft, which holds a large stake in OpenAI, saw its stock price fall more than 2%. Amazon, which has spent hundreds of billions on its build-out of AI infrastructure, also dropped more than 2%.

The downturn in markets largely reversed blockbuster gains from the previous session.

On Wednesday, the Dow jumped 1,570 points, or 3%, recording its best one-day performance since April 9, 2025, when President Donald Trump announced the suspension of a far-reaching set of reciprocal tariffs.

Even as stocks climbed on Wednesday, Yorkville analyst Dan Ives warned ABC News of potential midterm fallout for the tech sector.

"The Democratic blue tidal wave across the Senate and House was a seismic shift that will have a negative impact on the pace of the AI Revolution buildout in the US over the next few years," Ives told ABC News in a statement.

Tuesday's midterm elections catapulted Democratic Senate and gubernatorial candidates to statewide victories in Republican strongholds like Ohio and Texas, both of which play host to a number of AI data centers.

A strong performance in House contests, meanwhile, appeared to set Democrats on a path toward a comfortable majority in the lower chamber.

OpenAI unveiled a new set of data center policies Thursday for that it called "responsible AI infrastructure" in the aftermath of the election.

The ChatGPT maker said it would abide by fresh commitments, including a vow to pay for all electricity and infrastructure used at its facilities. It also will create a "water plan" for each location as part of an effort to "protect local resources," and will "create opportunities for local workers and businesses" for employment, the AI company said in a blog post.