Financial Markets                      11/05 15:33

   

   NEW YORK (AP) -- A brutal sell-off swept through Wall Street Thursday, led 
by stocks tied to the buildout of AI data centers. The wipeout more than erased 
the U.S. stock market's gain from the day before, which was its best in three 
months.

   The S&P 500 fell 4.4% for its worst day since President Donald Trump shook 
markets worldwide in April 2025 with his "Liberation Day" tariffs. The Dow 
Jones Industrial Average sank 1,833 points, or 3.4%, while the Nasdaq composite 
tumbled 5.5%.

   The Nasdaq, which is full of AI-related and other tech stocks, sank 11.9% 
below its all-time high set last month. Stock geeks call a loss of more than 
10% a "correction."

   Stock markets around the world felt pressure from continued drops for 
companies that had benefited from the boom in the artificial-intelligence 
technology industry, and South Korea's Kospi index tumbled 5.3%. Such stocks 
have been swinging for months on worries that the construction of further AI 
data centers may slow because of how expensive it's become to borrow money. 
Critics also said AI stock prices had shot too high and were in a bubble.

   Tuesday's U.S. midterm elections added another challenge. The nationwide 
victories for Democrats raised the possibility that governments could force 
pauses in construction of more data centers. Voters across political parties 
say they're wary about AI and don't like the increases to power bills caused by 
data centers.

   Any slowdown in construction of AI data centers would mean fewer purchases 
of AI chips, not to mention electricity and other products and services that 
are getting vacuumed up in the AI frenzy, which is driving much of the U.S. 
economy's growth.

   Nvidia, the chip company that quickly became the face of the AI boom, fell 
9.3% and was by far the heaviest weight on the S&P 500. It's now down 2.6% for 
the year so far following annual gains of roughly 39%, 171% and 239% in the 
last three years.

   Advanced Micro Devices tumbled 17.3%. CoreWeave, a company that rents access 
to AI chips to customers over the cloud, fell 9.8%. GE Vernova, which has been 
helping to power data centers, sank 7.5%.

   Compounding the pain for investors, AI chip stocks are some of Wall Street's 
most influential because they've become some of the largest. A 1% move for 
Nvidia, for example, has more effect on the S&P 500 than a 1% move for nearly 
any other U.S. stock.

   Thursday's losses were broad after gains for the majority of stocks on Wall 
Street during the morning quickly evaporated.

   Among the handful of winners was AppLovin, which jumped 31% after the 
marketing platform reported both revenue and profit that topped analysts' 
expectations. The company's board also approved a program to send up to $3.2 
billion to investors by buying back its own stock, bringing the program's total 
potential value to $3.6 billion.

   Tapestry rallied 7.1% after the company behind the Coach and Kate Spade 
brands likewise delivered a stronger profit than expected. It also raised its 
forecasts for revenue and earnings this fiscal year.

   Stock prices tend to follow where corporate profits and interest rates go 
over the long term, depending on them much more than on who controls what in 
Washington.

   All told, the S&P 500 fell 334.89 points to 7,353.73. The Dow Jones 
Industrial Average dropped 1,833.06 to 51,523.06, and the Nasdaq composite sank 
1,421.52 to 24,315.00.

   In other financial markets, the initial knee-jerk reaction to the U.S. 
midterm election results faded a bit. The price of a barrel of Brent crude oil 
rose 3.9% to $98.29 and recovered a chunk of its nearly 9% drop from the day 
before. Uncertainty still reigns about what will happen in the war with Iran 
and when the global energy industry can return to normal.

   In the bond market, Treasury yields continued to tumble. The yield on the 
10-year Treasury fell to 4.84% from 4.90% late Wednesday. It had been at 4.95% 
on election night and above 5.30% last month. That could be a signal that 
investors are herding into U.S. Treasury bonds in search of something that's 
safer to own as stock prices tumble.

   The drop in yields came despite some encouraging reports on the U.S. 
economy. Fewer U.S. workers applied for unemployment benefits last week. A 
separate report, meanwhile, suggested overall productivity for U.S. workers 
improved by more during the summer than economists expected. That could help 
the economy grow without adding pressure to the nation's high inflation.

   In stock markets abroad, indexes were mixed in Europe and Asia. Besides 
South Korea, Japan's Nikkei 225 also felt the sting of drops for tech and 
AI-related stocks and sank 1.8%.

   London's FTSE 100 dipped 0.4% after the Bank of England increased its main 
interest rate for the first time in three years to help limit high inflation.

   The bank said its next moves on interest rates will largely hinge on what 
happens with the Iran war, which sent oil prices and inflation higher worldwide.

   "We've seen encouraging news in the past 48 hours," Bank Gov. Andrew Bailey 
said at a press briefing. "The best thing that can happen is to resolve the 
conflict in the Middle East; there's no question about it."

   ___

   AP Business Writer Elaine Kurtenbach contributed to this report.

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