Global Markets: Deep chip selloff drags global stocks lower on AI spending concerns

Space Exploration Technologies

Today 21:53

Updates prices throughout with US market close
Chip stocks index posts biggest one-day drop since April 2025
Brent crude rebounds but remains below $100
Dollar edges higher, 10-year US Treasury yields at 4.835%
By Chibuike Oguh
NEW YORK, Nov 5 (Reuters) - Global stocks fell sharply on Thursday, weighed down by a deep selloff in semiconductor shares after weak earnings from Qualcomm and concerns that a Democrat-controlled US Congress could slow investment in artificial intelligence infrastructure.
Wall Street's main indexes tumbled, with the Nasdaq confirming a correction from its record closing high. Technology stocks led declines among S&P 500 sectors, while the Philadelphia Semiconductor Index .SOX slumped 12.2% - making it its biggest one-day drop since April 2025.
The Dow Jones Industrial Average .DJI fell 3.4%, the S&P 500 .SPX slid 4.4%, and the Nasdaq Composite .IXIC dropped 5.5%.
Qualcomm QCOM.O shares dived 9.5% after the company's smartphone chip sales missed Wall Street estimates.
"Disappointing earnings and the Dem sweep potentially slowing the AI buildout are pressing sentiment," said Mark Hackett, chief market strategist at Nationwide. "This is a volatile and cyclical group, and when sentiment shifts, the reactions are intense."
Candidates in Tuesday's midterm elections who opposed data centre expansion and campaigned in part on moratoriums on new developments also secured victories in Texas and Georgia, adding to doubts about the outlook for AI-related infrastructure spending.
The MSCI All-World index .MIWD00000PUS fell 3.1%, having surrendered earlier gains, while Europe's STOXX 600 .STOXX lost 0.38%.
"Hedge funds have been aggressively selling for weeks in this area. They were caught short yesterday and were forced to cover but today is a reflection that their bias is still to be short or to de-lever in the semiconductors and neoclouds," Hackett said.
All so-called Magnificent Seven stocks slumped on the day, with Nvidia NVDA.O shedding 9.3%. Companies led Elon Musk suffered heavy selling: Tesla TSLA.O slumped nearly 11% while SpaceX SPCX.O down 9%.
     
OIL REVERSES COURSE
Brent crude futures LCOc1 rose 3.88% to settle at $98.29 a barrel, as investors refocused on uncertainties about the future course of the US war with Iran. After US President Trump's Republican Party suffered heavy losses in the midterm elections on Tuesday, oil prices had tumbled.
Trump acknowledged on Wednesday that the war played a role in Republicans' defeat and his vice president, JD Vance, was even more blunt on X: "The reason we lost is the war." 
Bond prices eased from the day's highs, in line with the rebound in the crude price, leaving yields on benchmark 10-year US notes US10YT=RR down 5.73 basis points to 4.835%.
In currencies, the dollar edged into positive territory, gaining against the euro EUR=EBS, which fell 0.1% at $1.1222, and against the pound, which eased 0.16% at $1.345 after  the Bank of England raised interest rates for the first time since 2023 and signalled more may be necessary if the Iran war continues.
Spot gold XAU= rose 0.69% to $4,087.62 an ounce.
     

(Reporting by Chibuike Oguh in New York; Additional reporting by Amanda Cooper; Editing by Susan Fenton and Aurora Ellis)
((chibuike.oguh@thomsonreuters.com))