Stock market today: Nasdaq plunges 5% amid chip stock wipeout, Dow and S&P 500 erase post-election rally gains

The AI trade’s marquee stocks got clobbered on Thursday, sparking warnings on Wall Street of an institutional shakeout as investors move to lock in gains.

“They’re shooting the generals,” wrote Nomura cross-asset strategist Charlie McElligott on Thursday.

The unwinding of the 2026 popular thematic stocks has been “wildly acute” for more than a month, the strategist noted. The primary catalyst isn’t about a sudden deterioration in fundamentals, but a frantic dash by hedge funds to lock in their profits before the end of the year.

“Single-name stock moves are absolutely BONKERS,” wrote McElligott. “The Momentum/High Sharpe unwind has been so substantial that we are approaching the dreaded ‘Round Trip’ levels in some trades.”

The carnage has hit semiconductor and hardware stocks particularly hard. Shares of Lam Research (LRCX) are down 36% over the past month. Applied Materials (AMAT) has shed 30% over the past month, while AMD (AMD) and Nvidia (NVDA) are also down 22% and 15%, respectively, over the same period.

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Goldman Sachs (GS) promoted 109 employees to its coveted partnership on Thursday, its largest class since 2010, as the Wall Street giant elevated record numbers of asset managers and engineers to its senior ranks.

The new class is nearly 15% larger than in 2024 when Goldman named 95 partners, according to a statement from the bank.

Of the 109 new partners, 60 work in Goldman’s investment banking and trading division, while 33 are in Asset & Wealth Management. The firm also promoted 13 engineers.

In a departure from previous years, a Goldman executive declined to disclose the gender and racial makeup of the new class, citing changes in the legal environment. The executive added that with the latest round of promotions, the firm has more than 100 female partners.

Partnership status at Goldman is considered highly exclusive. The firm promotes new partners every two years. The promotion comes with higher compensation and additional financial benefits, including opportunities to invest in the firm’s private funds.

Once promotions take effect in January, Goldman will have a little over 500 partners, an executive said, amounting to roughly 1% of Goldman’s workforce.

It’s a bad day for the stock market.

Major indexes are falling Thursday, with technology stocks leading the sell-off and semiconductor shares among the biggest decliners.

But one rough session doesn’t necessarily amount to what investors deem a correction.

A correction generally refers to a decline of at least 10% from a recent high in a stock, index, or other asset. It is typically seen as a meaningful pullback, but one that stops short of a bear market, which is commonly defined as a drop of 20% or more.

That distinction matters after Wednesday’s sharp rally. The tech-heavy Nasdaq Composite (^IXIC) and the narrower Nasdaq-100 are each on pace to close Thursday in correction territory, as is the Philadelphia Semiconductor Index (^SOX). 

Meanwhile, the Dow and S&P 500 (down 3% and 4% from yesterday) aren’t close to correction territory.

Wall Street is dumping software’s AI winners and mostly leaving the losers alone. Palantir (PLTR) and CrowdStrike (CRWD) are both down more than 10% at their lows Thursday, while Salesforce (CRM) and Adobe (ADBE) are barely moving.

The sell-off that slaughtered chip stocks has spread to the software names most tied to the AI build-out. Palantir has shed about $40 billion in market value and is on pace for its worst day since February. The stock is now roughly a quarter below its Oct. 9 record and testing its 200-day moving average.

It has plenty of company. Cloudflare (NET), Rubrik (RBRK), Okta (OKTA), Palo Alto Networks (PANW), and Oracle (ORCL) are all posting steep losses, and Cloudflare is on pace for its worst day since May.

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SpaceX (SPCX) and Tesla (TSLA) stocks extended declines on Thursday, each dropping more than 9%. Shares of the Elon Musk-led companies were pounded after Democrats won control of the House and Senate this week, raising concerns over regulatory hurdles for data center buildouts in the US and merger aspirations between the two companies.

The Democratic win in Texas, where both SpaceX and Tesla are headquartered, is at the center of the concern. The state flipped blue at the gubernatorial level and saw the Senate seat won by James Talarico, with whom Musk got into fierce spats on social media leading up to the elections.

“We will believe a SpaceX/Tesla merger happens but now faces a much tougher regulatory roadmap to get this deal done in 2027 given this new political blue roadmap in DC/Texas,” Yorkville’s partner and managing director Dan Ives wrote on Thursday.

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Wall Street’s midterm celebration lasted one day. Chip stocks are getting taken to the woodshed Thursday, and the Dow Jones Industrial Average (^DJI) is heading for its worst second session after a midterm election in data going back to its start in 1896.

It took the Nasdaq Composite (^IXIC) six minutes to erase its entire post-election rally. Then the selling got worse.

The tech-heavy index is down more than 5% in late-morning trading, and the S&P 500 (^GSPC) is off more than 3%. Both are on pace for their worst day since the April 2025 tariff crash.

Investors bought stocks Wednesday after Democrats won control of both chambers of Congress, helped by falling oil prices and lower Treasury yields. Now the focus is on what a Democratic Congress could mean for the AI buildout, and in particular for the data centers driving it.

The S&P 500 is on pace for its worst second day after a midterm in data going back nearly a century. The previous low came in 2002, when the index fell about 2.3%.

This week has an echo from 1896. The day after William McKinley won the White House that November, the Dow jumped about 4.5%, then gave back about 2% the next session. On Wednesday, the Dow jumped 3%, its best day after a midterm since 1982.

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Bitcoin (BTC-USD) briefly tumbled below $76,000 on Thursday before stabilizing above the threshold as a broad sell-off in US stocks threatened to erase the previous day’s post-election rally.

The world’s largest cryptocurrency fell more than 5% Thursday, reversing a sharp rebound Wednesday that had lifted bitcoin above $80,000 as investors cheered midterm election results showing Democrats swept both chambers of Congress. The move has followed major indexes shedding their Wednesday gains.

Bitcoin’s retreat also underscored of the crypto market’s lingering fragility following $6.3 billion hack of Binance, the world’s largest cryptocurrency exchange, which rattled crypto prices last week.

The Democratic takeover of Congress also has raised fresh questions the crypto industry’s prospects in Washington, including passage of the industry’s long-stalled bill, the Clarity Act.

Brian Gardner, Stifel’s chief Washington policy strategist, said in a briefing with reporters on Thursday that the Clarity Act is unlikely to advance before the end of the year.

“It’s off the table for the lame duck session,” Gardner said, adding that the odds of a bipartisan compromise in the next Congress are “pretty low.”

Gardner added that he expects Senator Elizabeth Warren, who is poised to chair the Senate Banking Committee, to pursue investigations targeting crypto firms along with Wall Street banks and private equity firms.

US stocks were mixed Thursday as Wednesday’s post-election stock rally began to fade, tech stocks came under renewed pressure, and oil prices rebounded.

The Dow Jones Industrial Average (^DJI) rose 0.6%, while the S&P 500 (^GSPC) edged lower by 0.3%. The tech-heavy Nasdaq Composite (^IXIC) fell 1%.

Chip and data-center stocks were among the biggest laggards as investors continued to weigh what the Democratic sweep could mean for AI infrastructure spending and regulation. Qualcomm (QCOM) also sank after its quarterly results.

Oil prices bounced after Wednesday’s sharp sell-off, with Brent crude prices (BZ=F) climbing back above $97 per barrel.

AppLovin (APP) shares surged 23% in premarket trading on Thursday after the mobile app marketing company posted better-than-expected third-quarter profit and revenue and issued upbeat fourth-quarter guidance. Wall Street analysts raised their price target on the stock as results eased concerns over the company’s growth trajectory.

AppLovin’s third-quarter revenue of $2.18 billion topped analyst expectations of $2.07 billion, according to Bloomberg estimates.

Earnings per share came in at $4.30, ahead of the $4.04 consensus estimate. AppLovin issued a stronger-than-expected fourth-quarter forecast, projecting revenue between $2.37 billion and $2.40 billion, well above the $2.25 billion analysts had anticipated.

Wall Street analysts were quick to upgrade the stock, with BTIG raising its price target to $450 from $396 while maintaining a Buy rating, implying approximately 35% upside from current levels. Needham also reiterated its Buy rating with a $475 price target, implying an upside of roughly 43%

If you’re waiting for lower rates to buy a house, refinance, or pay down a credit card, corporate America may have bad news for you. Profits are growing so fast that one top economist says the economy could run at a pace last seen in 1984.

S&P 500 (^GSPC) earnings are up nearly 40% from a year ago, Apollo chief economist Torsten Sløk wrote in a Nov. 3 note. The economy is growing much more slowly, up about 6% in nominal terms, before adjusting for inflation. Strip out inflation and real GDP grew at a 3.4% annual rate in the third quarter. (Disclosure: Yahoo is a portfolio company of funds managed by affiliates of Apollo Global Management.)

By his math, “the current pace of earnings growth is consistent with nominal GDP growth of 10%,” Sløk wrote.

That would mean adding more than $3 trillion to a $33 trillion economy in a year. Outside the pandemic rebound of 2021-2022, the US hasn’t grown that fast since 1984, according to Yahoo Finance calculations from Commerce Department data.

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