The US markets experienced a sharp decline on Thursday, with the S&P 500 index dropping by 4.4%, its worst single-day performance since April 2025. This decline was reportedly driven by fears over artificial intelligence and possible regulation by the incoming Democratic Congress.
The tech-heavy Nasdaq Composite also fell, declining by more than 5.5% and entering correction territory. The collective value of major tech companies, including Apple, Microsoft, and Amazon, lost over $1 trillion. Analysts attribute the decline to investor concerns about potential stricter regulations on the AI industry and broader concerns about the sustainability of the AI buildout.
The market decline followed a rally the previous day, suggesting a significant shift in investor sentiment. The drop in the markets is seen as a reaction to the potential regulatory environment that may emerge with the incoming Congress. The significant loss in value of major tech companies reflects the market's uncertainty about the future of the AI industry.