Nov. 5th Market Overview: The Nasdaq Is Now in a Correction

Happy Thursday

Jeez, what a brutal day the NASDAQ down almost 6%.

It took six minutes this morning to give back its whole post-election rally, and chip stocks led the selling on fears of a slower AI build-out.

I was a bit uneasy in October about how hot breadth was running. Breadth tracks how many stocks are rising along with the index, and days like this are why I built the Market Health Dashboard. You can see in the chart below how stretched (relatively) things got before today.

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Let's dig in...

Today's Big Picture

1. The Nasdaq Is Now in a Correction 
   Chip stocks had their worst day since March 2020 and dragged the Nasdaq into a correction. It now sits more than a tenth below its Oct. 6 record. The S&P 500 fell the most since the April 2025 tariff crash, and the seven biggest tech stocks lost about $1.1 trillion in value, a one-day record. The equal-weight S&P 500, where every company counts the same, is now ahead of the regular index for the year.
   

2. Borrowers Took the Worst of It CoreWeave 
   $CRWV rents Nvidia chips to AI companies and repays its loans with money from future contracts. Any delay in new data centers puts those payments at risk, and the stock has lost half its value in a month. Its 2032 bonds traded as low as 74.75 cents on the dollar today. Bond buyers now want more than double the extra interest over Treasurys that they wanted in June.
   

3. Hedge Funds Rushed to Lock In Gains 
   Nomura’s Charlie McElligott said hedge funds are cashing in this year’s AI winners before year-end, with no sudden change in the businesses behind them. He called it “shooting the generals,” meaning traders sell their biggest winners first. Funds that triple the daily move in chip stocks made it worse, and one of them took in about $9 billion since Oct. 2. When prices fall, those investors rush to cut their losses, which adds more selling.

Market Overview

Index Performance

Stock spotlight

AppLovin $APP ( ▲ 30.69% )  
had its best day in two years while most of tech fell. The mobile app ad company beat estimates and guided fourth-quarter revenue well above forecasts, though the stock is still down for the year.

Qualcomm $QCOM ( ▼ 9.13% )  
fell even after beating estimates, because the memory shortage hurt sales of its smartphone chips. Morgan Stanley said the debate now is its data center goal of more than $15 billion in sales by fiscal 2029.

Global Payments $GPN ( ▼ 0.7% )  
rose on a red day after raising what it expects to gain from the Worldpay merger to $650 million by 2028, up from $600 million. Management wouldn’t comment on reported buyout talks with Clayton Dubilier & Rice and GTCR.

Big name updates

Nvidia $NVDA ( ▼ 8.5% )  
had its biggest one-day drop since March 2025, enough to wipe out all of its gains for the year. Its market value has fallen by more than $1 trillion since Oct. 6.

AMD $AMD ( ▼ 14.84% )  
fell just days after an impressive earnings report. CEO Lisa Su told Yahoo Finance the market can be short-sighted and that she doesn’t see AI chip demand slowing anytime soon.

Tesla $TSLA ( ▼ 11.33% )  
led the drop in the seven biggest tech stocks, and Elon Musk’s SpaceX fell with it. Analyst Dan Ives said a merger of the two now faces a tougher regulatory road in 2027.

Oracle $ORCL ( ▼ 6.8% )  
fell again after the Journal reported that OpenAI, a big data-center customer, discussed whether the election means resetting next year’s plans. Oracle said this week it will raise $20 billion in debt and stock to keep building.

Palantir $PLTR ( ▼ 9.77% )  
shed about $40 billion in market value as investors sold the software companies most tied to AI. Salesforce and Adobe, which haven’t been AI winners, barely moved.

Other notable company news

Vertiv $VRT ( ▼ 14.26% )  
, which sells power and cooling gear to data centers, has fallen hard this week even though it reported strong earnings days ago.

Marvell $MRVL ( ▼ 16.3% )  
and Lumentum, which agreed to an $80 billion merger this week, have each lost about half their value over the past month.

Coinbase $COIN ( ▼ 8.83% )  
fell as bitcoin briefly dipped below $76,000, its lowest since September. Crypto was already shaky after last week’s $6.3 billion hack of Binance.

Goldman Sachs $GS ( ▼ 5.99% )  
named 109 new partners, its biggest class since 2010.

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Sector Watch

Bond market

Money ran to Treasurys as stocks fell, and the 10-year yield dropped to its lowest level since Sept. 9. This was mostly money ducking the stock sell-off, so I’d wait for Friday’s jobs report before reading much into it about the economy.

Policy watch

Data centers

Wall Street spent today pricing in a fight over data centers that hasn’t started yet. Bernie Sanders called for a national moratorium on Wednesday night, and Arizona Rep. Yassamin Ansari wants the new House majority to make pausing AI development a Day 1 priority. None of that can happen before the new Congress is seated in January, and President Trump still has his veto. I’d still take it seriously. In CNBC’s poll, more than half of voters said AI and data centers weighed on their vote, and about two-thirds of that group backed Democrats.

• House Democrats are already lining up AI executives to testify under oath.

• OpenAI repeated today that it will pay the full cost of powering its data centers, which reads like a company trying to get ahead of the backlash.

Fed

The sell-off took some heat off the Fed. Traders still expect a rate hike on Dec. 9, but CME data shows the odds slipped to about 7 in 10, from 8 in 10 on Wednesday. Come January, any new Fed governor President Trump nominates will also need the approval of a Democratic Senate.

What to Watch

*AI is becoming physical

Robotics and automation are rapidly becoming essential infrastructure across healthcare, manufacturing, logistics, and many other industries. "Physical AI" is coming. Learn which seven companies are most positioned to benefit as intelligent robots enter the workforce.

October Jobs Report Friday

Challenger, Gray & Christmas says October layoff plans were the lowest since 2023, so the number to watch is hiring. A strong report keeps a December hike likely, and a soft one gives the Fed room to wait. The University of Michigan’s first November read on consumer mood also comes out, and Fed Vice Chair for Supervision Michelle Bowman speaks.

The S&P 500’s 200-Day Line

The Nasdaq fell below its 200-day moving average today for the first time since April. That’s the average closing price of the last 200 trading days, and the S&P 500 was trading just above its own this afternoon. A close below it would be the first since April, and many traders read that as a sign a longer downtrend may be starting.

Thanks for reading - you are now the more informed 🙂

- John

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