Thursday was the worst trading day Wall Street has seen since April 2025. The Nasdaq Composite fell 5.52 percent, closing more than 10 percent below its recent high and officially entering what traders call a correction. The S&P 500 dropped 4.36 percent and the Dow Jones Industrial Average fell 3.44 percent, as a sell-off that started in artificial intelligence stocks spread across the broader market.
The losses were large enough in dollar terms to be described as a $3.2 trillion wipeout across Wall Street, and the selling did not stay contained to the United States. Asian markets fell sharply on Friday as the worry spread overnight: Australia's S&P/ASX 200 slipped 0.5 percent to 9,020.80, and markets in Japan and South Korea, which are heavily exposed to the semiconductor supply chains that have ridden the AI investment wave, saw sharper declines. In India, the Sensex and Nifty opened only mildly positive despite the weak overseas cues, with foreign investors still net buyers of Indian equities on Thursday.
At the heart of the sell-off is a question that has been building for months: whether the enormous capital spending by technology companies on AI data centers and chips will be matched by actual revenue. Investors have also grown more cautious about financing arrangements between major AI companies and their chip suppliers that critics have likened to circular deals, where firms invest in each other's businesses. Retail investors joined the retreat, reportedly selling around $257 million in stocks in one of the five biggest single-day selling episodes since 2020, and the dollar drew safe-haven buying as the AI-driven rout spread through Asian markets.
By Friday morning, U.S. stock futures were attempting to stabilize, though they moved in different directions: Dow futures slipped modestly while S&P 500 and Nasdaq-100 futures turned higher, suggesting an early rebound attempt in the most beaten-down technology names. Traders were also looking ahead to a closely watched October jobs report for fresh evidence on the health of the labor market. Away from the broader rout, Airbnb shares jumped after hours on strong growth and a raised full-year outlook, a reminder that not every consumer-facing technology company has been caught in the AI-specific unwind.
Whether Friday's jobs report calms or adds to investor nerves, and whether the rebound in Nasdaq futures holds through the full trading session.
What triggered the sell-off?
A sharp retreat in artificial intelligence related stocks on worries about whether heavy AI capital spending will be matched by revenue, which spread into the broader market.
Is this only a U.S. problem?
No, the sell-off spread overnight into Asian markets including Australia, Japan, South Korea, and affected sentiment in India as well.