Nasdaq Loses a Historic $2.5 Trillion in Market Cap in AI Rout After Election

A historic rout in AI stocks today wipes $2.5 trillion from the Nasdaq. Plus, the window for President Trump to get another conservative justice on the Supreme Court has pretty much closed. Most people close to the court and most people close to the Senate believe that Senate Democrats would be almost certain to block any Trump-nominated justice. And Europe's skies suffer their second day of disruptions this week after a string of bomb threats scrambled flights. It's Thursday, November 5th. I'm Alex Osele for The Wall Street Journal. This is the p.m. edition of What's News, the top headlines and business stories that move the world today. It was a brutal day for stocks. The Nasdaq lost $2.5 trillion in market cap. The S&P lost $2.9 trillion. Both were the biggest one-day declines on record. The Nasdaq fell 5.5% today and was officially in a correction. That's having fallen more than 10% from a recent high. The S&P dropped 4.4%, while the Dow lost more than 1,800 points, or 3.4%. Most corners of the tech sector got hit, including chipmakers, power producers, and software makers, in a sell-off that appeared to feed on itself as the day wore on. Journal Markets reporter Jack Pitcher is here now to discuss. Jack, we had you on yesterday. Thank you. We're going to talk about how well stocks are doing, and today, not so much. What happened here? So, one of the interesting things about yesterday, even though the indexes were up broadly, you did have pretty steep selling in chip stocks and other companies tied to building out data centers. So, there were some jitters yesterday about the AI trade. That was kind of covered up by oil fell a lot yesterday, and that made stocks everywhere go up. Today, we've got this. We've got this full 180, where stocks are down sharp across the board. The worst of it is in AI trade and data center build-out-related stuff, but we've got every S&P 500 sector lower today. That's the first time that's happened since June, and traders we've talked to today are relatively perplexed. We've heard from people who say that some of the tech selling, it's a reaction that makes sense, and they thought they'd see more of yesterday after the results of the elections. But things have gotten ugly. So, it seems like the downturn in the tech stocks in particular comes from this fear that the data center build-out might slow down after the midterms swept AI skeptics into power. But is that all? We're seeing NVIDIA now down for the year. Did the election feed on existing concerns around the AI build-out? There's been, I'd say, more doubt creeping in on the AI trade. When is the money being made from this build-out that companies are planning to spend hundreds and hundreds of billions? When is the money being made from this build-out that companies are planning to spend hundreds and hundreds of billions of dollars on? When is that going to pencil out for investors? It's not clear. We're talking about stocks and industries that have gone way, way up, oftentimes double or tripled or more than that. When you have these really big gains in a short period of time, it does put stocks more susceptible to sharp downturns when sentiment turns through the day. Journal Markets reporter Jack Pitcher, thanks so much for joining us. Thank you. And we have a call on the Los Angeles mayor's race. City Council member Nithya Raman has beaten the incumbent Karen Bass. Bass's popularity fell after the 2025 wildfires that destroyed parts of L.A. Raman is a member of the Democratic Socialists of America, and her win means that DSA members will now run America's two largest cities, L.A. and New York, as well as its capital, Washington, D.C. Shifting now to national politics, during his first term, President Trump put three justices on the table. Now, with Democrats set to take control of Congress, he's not likely to get a fourth. James Ramoser covers the Supreme Court for the Journal and is here now to discuss. James, there is a rapidly closing path for Republicans to get another Supreme Court nomination while they have control of Congress and the White House. That's if a conservative justice steps down now. I remember this kind of strategy for Democrats back when Obama was president. Ruth Bader Ginsburg was under pressure to step down, but she didn't do that. And then President Trump got to nominate someone to fill her seat when she died in 2020. So do we have any indication that the two oldest justices on the Supreme Court, Clarence Thomas and Samuel Alito, are going to step down? Supreme Court justices don't like to give up their jobs, you know, even when they're getting older. I think some on the right were hoping that they would see a lesson in what happened with the Ruth Bader Ginsburg seat and retire under the Trump presidency when Republicans had controlled the Senate. Thomas. Thomas and Alito have not done that. And this idea that either Thomas or Alito would change their mind in light of the midterm elections is really far-fetched. Despite what many on the left think of Thomas and Alito, I don't think Thomas and Alito think of themselves as partisan actors. And that kind of maneuver would be seen as brazenly political. It would define their legacies. My reporting suggests that neither justice has any plans to go anywhere anytime soon. Because they're aware that Senate Democrats are extremely likely to block any Trump nominee for a Supreme Court vacancy. And so even if they would have been maybe inclined to consider retirement if Republicans had held the Senate during the final two years of Trump's term, I think the blue wave on Tuesday essentially locks in the composition of the Supreme Court for at least the next two years. You mentioned that Democrats would be able to block any Trump nominee. How does that work exactly? They just say, no, try again? Yeah, that's right. If you recall, in the final year of the Obama presidency, there was a Supreme Court vacancy when Antonin Scalia died. And Obama nominated Merrick Garland to that seat. And Republicans who controlled the Senate at the time held the seat open. They refused to even hold hearings on Garland's nomination, let alone give a vote on that nomination. Democrats were really mad about that, right, if I recall? Absolutely. Democrats were extremely mad about that. But I think now, especially given the strength of the blue wave on Tuesday, they may be in a payback mood. Let's cast this forward a little bit. Republicans are likely to face a number of tough Senate races in the 2028 election. What does this potentially mean for the court's 6-3 conservative majority? Is that potentially a thing that will no longer exist? In order for a party to put new justices on the Supreme Court in this day and age, they will need to control the Senate. They will need to control both the White House and the Senate at the same time. And given the way the map looks in 2028, it could be quite a while before Republicans retake the Senate, which means that it may be difficult for them to confirm new conservative Supreme Court justices for a really long time. That was Journal reporter James Ramoser. Coming up, Liv Golf finally throws in the towel. That and more after the break. We'll be right back. This week, and Ben Katz, who covers aviation and aerospace for the Journal out of London, says it's hard for officials to deal with these threats, especially because the cost of not acting can be so high. The authorities have chosen to act in excess of 12 times just today. This week, we've seen over 20 incidents and each one is treated as credible and as a result requires aircraft to be diverted. We've seen fighter jets scrambled to go and escort aircraft. We've seen flights delayed as bomb squads come. In terms of the disruption that causes, I mean, aviation is this really orchestrated global ballet of movements and that relies on aircraft arriving on time, departing on time, your crew having the sleep that they need. Any kind of disruption to that just has these knock-on effects that are really painful for airlines. What's a little bit worrying for them is just how vulnerable they are, that there isn't really much to do to stop this from happening. Ben says threats to civilian infrastructure are increasingly common around the world. We're entering this different phase where these state actors, militias, governments are really starting to see civil aviation as a viable target. And that ranges from the Houthi strikes in Saudi Arabia that have, in a single strike, killed more than 12 people, injured hundreds more at Riyadh airport. Then at the same time, we have Ukraine that has been sending hundreds of drones into Russian airspace in a very explicit attempt to get Russia to shut down its own airspace. In other international news, the president of Paraguay, one of Washington's closest allies in South America, has resigned. The president, Santiago Peña, was almost certainly going to be impeached after a bank he was closely connected with collapsed. That bank is Ueno Bank, and it closed suddenly earlier this week after regulators said it didn't have enough in reserves to cover the risks of making loans. People couldn't access their accounts and there were protests in the streets of Paraguay. In a post, he said, on X, Pena apologized to the people of Paraguay, and he said it wasn't his fault. intention to betray their trust. And in the latest sign that China wants to keep its valuable technology from getting shipped abroad, Beijing has blocked SoftBank's $5.4 billion deal for the robotics unit of a Swiss company called ABB. The deal was subject to Beijing's approval because ABB Robotics' largest market is in China. It's a blow to SoftBank, which was counting on the ABB business for its investments into physical applications of AI. The Japanese company today declined to comment. And finally, well, the writing's been on the wall for months, but Live Golf, the upstart league that burst onto the scene in 2022, will wind down. The league ended up in bankruptcy court after Saudi Arabia's public investment fund pulled its backing earlier this year. And though people around the league said they could turn it around and keep it afloat, it had a hard time bringing golfers on board. Now, the deadline for them to commit has come and gone, leaving Live Golf to die quietly in a New Jersey bankruptcy court. As for the players, Live's downfall leaves them with an uncertain future. Some have said they plan to play on Europe's DP World Tour. Yes, it has much smaller coffers, but it could be a way to make it back onto the PGA Tour. And that's what's news for this Thursday afternoon. Today's show is produced by Anthony Bansi and Danny Lewis with supervising producer Tali Arbel. I'm Alex Oseleff for The Morning. Thanks for listening.