Nasdaq Plunges 5.6% Into Correction as Chip Index Suffers Second Worst Day in History | Tilt

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This story on the S&P 500

Nasdaq Plunges 5.6% Into Correction as Chip Index Suffers Second Worst Day in History

The Nasdaq Composite plunged 5.56%, or 1,430.82 points, to close at 24,305.70 on Thursday, confirming a correction with its deepest single-day drop in 19 months as the Philadelphia Semiconductor Index tumbled 12.2% for its second-worst day in history. Only the chip gauge’s 15.9% crash on March 16, 2020, was steeper. The S&P 500 fell 4.33% to 7,355.81, erasing more than $3 trillion in market value in its biggest daily decline since April 3, 2025, and wiping out Wednesday’s post-election rally, while the Dow Jones Industrial Average lost 3.45%, or 1,840.31 points, to 51,515.81 and the Nasdaq 100 sank 6.4%.

How it could play out

−0.6%Impact on the S&P 500 across 4 scenarios (−2.7% to +1.9%)

Scenarios

Each figure is the modeled move of the S&P 500 if the outcome occurs. For information only. Not investment advice.

How it could play out

Scenarios

Story, how it could play out

4 ways this could read

Possible futures, not reported news · chances and moves from Tilt’s model

−1.8%
Selling Extends
The correction continues as investors further reduce exposure to AI infrastructure winners after the extreme chip-led selloff. Portfolio managers treat the move as a valuation and capex-reset event rather than a one-day technical break.
Technology −3.0% · Finance −0.7% · Business Services −0.4%
+1.9%
Relief Bounce
A sharp short-covering rally develops after the scale of the decline draws in tactical buyers. The bounce is driven by positioning, valuation support and attempts by large technology companies to reassure investors on AI demand.
Technology +3.2% · Finance +0.6% · Consumer Cyclicals +0.5%
−0.1%
AI Rotation
Rather than abandoning equities altogether, investors rotate away from the most crowded AI hardware trades. Defensive sectors and less capex-sensitive technology groups attract flows as the market reassesses earnings quality.
Utilities +0.7% · Consumer Non-Cyclicals +0.6% · Technology −0.6%
−2.7%
Liquidity Stress
The chip-led correction begins to interact with volatility targeting, margin calls and ETF flows. This remains far short of a systemic crisis, but market depth deteriorates enough to create another sharp short-term risk-off move.
Technology −4.0% · Finance −1.8% · Consumer Cyclicals −1.2%

Each figure is the modeled move of the S&P 500 if it happens. For information only. Not investment advice.

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