Dow slides 3.44%, S&P 500 drops 4.36%, Philadelphia Semiconductor Index tumbles 12.25%.
Qualcomm smartphone sales slump adds pressure; market looks toward upcoming employment report amid rising oil prices and hawkish Fed commentary.
U.S. equity markets took a sharp downturn on November 5 (local time) as growing concerns regarding a potential slowdown in AI infrastructure investment rattled investor confidence. The three major indices surrendered the gains made during the previous day’s post-election rally, with the Nasdaq entering correction territory after falling more than 10% from its recent peak.
The Dow Jones Industrial Average closed at 51,523.06, down 1,833.06 points (3.44%). The S&P 500 declined 334.89 points (4.36%) to 7,353.73, while the Nasdaq Composite shed 1,421.51 points (5.52%) to settle at 24,315.00.
The Philadelphia Semiconductor Index cratered by 12.25% to 9011.14. The Nasdaq is now approximately 11.9% below its all-time closing high reached on October 6.
From Election Certainty to Regulatory Hurdles
The Democratic party’s control of both the Senate and the House—which had buoyed the market the previous day—turned into a liability. Investors grew concerned about how this new political landscape might constrain the expansion of the AI industry. Reports of rising local opposition to data center developments in regions won by Democrats fueled speculation that permitting for new facilities could face stricter scrutiny or significant project delays, chilling market sentiment.
This anxiety centered on semiconductor stocks, as the pace of data center expansion directly impacts demand for chips, memory, and server components. If construction schedules slip, the timing of hardware supply and subsequent revenue recognition will follow suit. The market’s bullish expectations, predicated on rapid infrastructure deployment, suffered a sharp reversal.
However, the specific nature of potential regulations—and whether companies will indeed revise their investment plans—remains uncertain.
Qualcomm Earnings Weigh on Tech
Policy concerns were exacerbated by lackluster corporate results. Qualcomm reported fiscal Q4 2026 smartphone chip revenue of $5.137 billion, a 26% year-on-year decline that missed market expectations. The company cited rising costs across wafer manufacturing, advanced packaging, and memory.
Earnings guidance for the coming quarter also underwhelmed. Qualcomm projected adjusted earnings per share (EPS) for fiscal Q1 2027 (October–December) in the range of $2.15 to $2.35. The midpoint of $2.25 fell slightly short of the $2.27 consensus estimate.
Qualcomm shares slumped 9.49%. The sell-off spread to broader semiconductor peers: Nvidia fell 9.26%, AMD plummeted 17.26%, and memory and storage firms Micron and SanDisk dropped 17.46% and 22.26%, respectively. Server-maker Dell Technologies retreated 14.89%, while AI cloud firms Nebius and CoreWeave declined 14.94% and 9.83%. Large-cap tech also faced headwinds, with Meta, Amazon, and Alphabet (Class A) falling 3.96%, 2.19%, and 2.20%, respectively, while Tesla slipped 10.77%.
Conversely, companies with strong earnings performed well. Ad-tech firm AppLovin surged 31.04% after reporting a 55% year-on-year increase in Q3 revenue to $2.185 billion, with net income rising 72% to $1.439 billion.
Macro Factors: Oil Prices and Labor Data
Oil prices rebounded as reports of tanker attacks renewed fears over Middle Eastern supply stability. West Texas Intermediate (WTI) rose 2.72% to $90.52 per barrel, and Brent crude gained 3.88% to $98.29.
In labor market news, initial jobless claims for the week ending October 31 fell to a seasonally adjusted 189,000, down 6,000 from the previous week's revised figure. However, continuing claims rose by 23,000 to 1.718 million for the week ending October 24, suggesting that the overall improvement in the labor market requires further data verification.
Preliminary estimates for Q3 labor productivity in the non-farm business sector rose at an annualized rate of 3.6%. Hourly compensation increased by 2.9%, while unit labor costs decreased by 0.7%, indicating a slight easing in labor-related cost pressures.
Federal Reserve Stance
Federal Reserve officials continued to signal the need for further tightening. Cleveland Fed President Beth Hammack stated that for inflation to return to the 2% target, monetary policy must reach a "restrictive" level. She indicated a preference for more frequent, smaller adjustments rather than a single large move.
Despite the hawkish tone, the U.S. 10-year Treasury yield declined to approximately 4.84% by 3:00 PM in New York, as the stock market plunge drove investors toward safe-haven assets.
The market is now focused on the U.S. October employment report, scheduled for release at 10:30 PM KST on November 6. Non-farm payrolls, the unemployment rate, and wage growth figures are expected to be key benchmarks for assessing potential further interest rate hikes by the Fed.
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