Nasdaq falls into a correction as chip stocks crater, giving back Wednesday's whole rally

US stocks fell hard on Thursday as the artificial intelligence trade unwound for a second day. CNBC reported that the Nasdaq Composite dropped into correction territory, more than 10% below the record it set last month, while Investing.com said the index had earlier been down as much as 5.7%. The AP's markets page described a "wipeout" for stocks tied to the AI data center buildout that "more than" erased Wednesday's gains.

The numbers at midday

We checked levels against Yahoo Finance data at about 11:50 AM ET. These are live readings, not closes, and will change before the bell.

Correction, measured two ways

A correction is a drop of 10% or more from a peak. The Nasdaq's highest close in our data was 27,599.8 on Oct. 6. A 10% fall from there is about 24,840, and the index traded near 24,640 at midday, roughly 10.7% below. Because this is an intraday reading, the index could close above that line and not log an official correction at the bell. Check the close before repeating the label.

Where the damage is

The selling is concentrated in chips and data center names. Midday moves against Wednesday's close, from our data:

• Micron: about 700 from about 795, down about 12%.
• Broadcom: about 303 from about 325, down about 6.9%.
• Nvidia: about 187 from about 200, down about 6.8%.
• Tesla: about 346 from about 385, down about 10%.

CNBC also reported that Qualcomm fell about 11% after an earnings outlook that disappointed even though it beat estimates (see our Qualcomm report), and that neocloud stocks CoreWeave, Nebius and Iren dropped between 9% and 14%.

Why traders say it is happening

CNBC attributes the move to fear that a Democratic sweep of Congress and key governorships could slow the data center buildout. We covered the first sign of that split on Wednesday in our update on neoclouds. Tim Holland of Orion told CNBC that investors want a better sense of what the election means "around the AI capex cycle", which he called the biggest economic tailwind of the last three years. The Macro Research Board wrote on Thursday that the shakeout "has much further to run," according to CNBC. Those are analysts' views and forecasts, not facts about where prices go next.

This is also not only an election story. Markets were already weak before the vote: the AP's page lists "worst day since June" on Oct. 30. The record-high question for the broader market is in our November 4 fact check.

What did not fall

Safe-haven assets rose. December gold futures reached $4,155.80 an ounce, the highest since Oct. 22, CNBC said, and the 10-year Treasury yield was about 4.85% in Yahoo data, down from about 4.89% on Wednesday. Jobs data gave no help to the bears: initial jobless claims were 189,000, below the 197,000 expected (our report).

Who feels it

A 4% drop in the Nasdaq reaches a 401(k) or a target-date fund through the large chip and software holdings in broad index funds, so even a diversified saver sees part of it. A small business owner who set aside cash in a brokerage account should note that it is a one-day reading in a volatile week, and that tax, payroll and rent dates do not move with the VIX. Chip and equipment makers, and the electricians, contractors and suppliers who depend on data center construction, are the businesses with direct exposure if the buildout slows. Nothing in today's data shows that happening yet; it is what the market is pricing.

Sources: CNBC; Investing.com; AP; Yahoo Finance market data via our own pull at about 11:50 AM ET. Some data may be delayed. This is market information, not investment advice.