{"id":28378,"date":"2026-11-06T06:12:51","date_gmt":"2026-11-06T06:12:51","guid":{"rendered":"https:\/\/globalnewstoday.uk\/index.php\/2026\/11\/06\/wall-street-plunge-wipes-off-3-2-trillion-in-market-value-world-socialist-web-site\/"},"modified":"2026-11-06T06:12:51","modified_gmt":"2026-11-06T06:12:51","slug":"wall-street-plunge-wipes-off-3-2-trillion-in-market-value-world-socialist-web-site","status":"publish","type":"post","link":"https:\/\/globalnewstoday.uk\/index.php\/2026\/11\/06\/wall-street-plunge-wipes-off-3-2-trillion-in-market-value-world-socialist-web-site\/","title":{"rendered":"Wall Street plunge wipes off $3.2 trillion in market value – World Socialist Web Site"},"content":{"rendered":"

In one of its largest declines this century, the market value of stocks on Wall Street plunged $3.2 trillion yesterday led by a precipitous drop in AI and high-tech stocks which left the tech-heavy NASDAQ index down by 6.4 percent for the day.
The plunge in the market came after an initial uptick following the sweeping repudiation of Trump in the midterm elections for Congress. The violent selloff just 24 hours later appears to have been triggered by concerns that Democrat victories in state governorships will bring about restrictions on the AI buildout.
The Democrats won gubernatorial elections in Texas, Ohio, Nevada, Michigan, Georgia, Pennsylvania and Arizona with warnings that restrictions could be introduced on the construction of AI data centers. There is significant opposition from communities on a variety of grounds, among them fears that AI power demands are going to bring sharp rises in electricity prices along with concerns over water costs.
The issue was significant in Texas where ousted Republican governor Greg Abbott had backed away from his previous fulsome support for data center construction in the lead-up to the election.
Texas has some 248 data centers planned for construction, around a quarter of all planned US data center development, and the incoming Democrat governor, Gina Hinojosa, has said she will issue a ban on all new approvals until new laws are passed.
It has been estimated that 41 percent of all US planned data centers are in states where the new governor is in favor of a pause.
The selloff, described universally as \u201cbrutal,\u201d was concentrated in the so-called Magnificent 7 which have powered the market to record highs. They lost a total of $1 trillion, much of it wiped out within minutes of the market opening.
The PHLX Semiconductor Index dropped by 12.25 percent, its worst day since the start of the pandemic in March 2020. Unlike previous high-tech selloffs, there was no shift into other stocks and the S&P 500 index dropped by 4.4 percent, its worst day since the major fall in the market following Trump\u2019s announcement of global \u201creciprocal\u201d tariffs in April 2025.
The selloff encompassed the major names in AI and high-tech development.
Shares in Nvidia, which manufactures the chips at the center of the AI boom, fell 9.3 percent, reducing its market value by more than $400 billion. Chipmakers were impacted across the board.
Qualcomm shares dropped 9.5 percent, Broadcom 10 percent and Micron was down 17 percent. The Financial Times<\/em> (FT) noted: \u201cMemory stocks Sandisk and Western Digital\u2014among the market\u2019s best performers this year\u2014plunged 22 percent and 17 percent, respectively.\u201d
Elon Musk companies based in Texas, where the multi-billionaire had spent hundreds of millions of dollars in the election campaign, were also impacted. Tesla shares dropped 10.8 percent after a 3.3 percent decline the day before and SpaceX fell 9.1 percent, after a previous 3.8 percent decline.
There was a shocked reaction from the AI and tech chiefs. Greg Brockman of OpenAI told a Wall Street Journal<\/em> conference that he had been surprised by the backlash in local communities against data center construction. \u201cNo one really has seen something like this in American politics,\u201d he said.
Comments from a senior manager of a Wall Street broker-dealer cited by the Journal <\/em>summed up the prevailing market sentiment.
\u201cIt seems like the rug is getting pulled out from under it,\u201d he said. \u201cThe market continues to be extremely fragile with all this uncertainty in front of us.\u201d
While some executives have been \u201cspooked\u201d by the proposed restrictions of some of the Democrats others are taking a longer-term view.
One unnamed executive at a \u201clarge tech company\u201d cited by the FT said while the election result had disrupted construction plans in the short term, it was hoped that a \u201cworkable middle\u201d could be reached with Democrats by sometime next year \u201cpaving the way for the continued data center buildout\u201d because \u201ceventually, the fundamentals win out.\u201d
In any case, concern over possible restrictions on the buildout was not the fundamental cause of the selloff but rather the catalyst which set it off.
The fundamental reason resides in the very nature of the boom and its highly speculative character. Hundreds of billions of dollars, trillions, resting on a mountain of debt, are being outlaid on the basis that at some, unspecified, time in the future there will be a massive profit for those firms which can win the buildout battle.
There have been continuous warnings of a crash of major proportions. Two of the latest came on the eve of yesterday\u2019s selloff.
In a comment with the headline \u201cAre we ready for an AI bust?\u201d FT economics commentator Martin Wolf pointed to the cash problems of the hyperscalers, resulting from their free cash flow\u2014the difference between the capital outlays and money they have available after financing their business operations\u2014has gone from positive to negative.
This has led to the development of \u201cever more complex financial arrangements\u201d being made to take on debt, much of it hidden by syndicated bank loans and private credit facilities for which there is little information available.
Wolf based himself on a recent paper by Stijn van Nieuwerburgh of Columbia Business School which drew out that the AI boom was larger in scope than any specific sector, such as railways, that had gone before it. According to van Nieuwerburgh, \u201cthe central issue is not simply that AI infrastructure is exposed to technological and operating risks, but that the sector\u2019s financing structure can transmit and amplify those risks.\u201d
In a comment published in the FT yesterday, Stephen Roach long-time head of Morgan Stanley Asia and now a professor at Yale, also focused on the cash flow issue, noting that with the hyperscalers going from positive to negative and with interest rates on the rise \u201ca financial squeeze is more likely than not.\u201d
Alphabet (the owner of Google) which lost nearly $500 billion in the market last week \u201ccould be the canary in the coal mine.\u201d
\u201cWith Alphabet\u2019s net debt issuance in excess of $75 billion in the first nine months of 2026 versus a little more than $11 billion over the comparable period of 2025, there can be no mistaking the ominous turn in the AI leveraging cycle.\u201d
Yesterday\u2019s market events are a confirmation of that warning.<\/p>\n

source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

In one of its largest declines this century, the market value of stocks on Wall Street plunged $3.2 trillion yesterday led by a precipitous drop in AI and high-tech stocks which left the tech-heavy NASDAQ index down by 6.4 percent for the day.The plunge in the market came after an initial uptick following the sweeping […]<\/p>\n","protected":false},"author":1,"featured_media":28379,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-28378","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business"],"_links":{"self":[{"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/posts\/28378","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/comments?post=28378"}],"version-history":[{"count":0,"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/posts\/28378\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/media\/28379"}],"wp:attachment":[{"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/media?parent=28378"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/categories?post=28378"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/tags?post=28378"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}