US stocks just had their roughest week in a year and a half. The S&P 500 fell 2.7% for the week ending November 6, 2026, its worst week since the April 2025 tariff shock. The Nasdaq dropped 3.4%, its fourth weekly loss in a row, and the Dow slipped 0.9%. Here is what happened, why, and what it means if you invest for the long term.
The week in numbers
| Index | Week | Friday close |
|---|---|---|
| S&P 500 | −2.7% | 7,376.86 (+0.3% Friday) |
| Nasdaq Composite | −3.4% | 24,579.42 (+1.1% Friday) |
| Dow Jones Industrial Average | −0.9% | −0.5% Friday |
Thursday: the AI sell-off
Almost all the damage came on Thursday. The S&P 500 fell about 4.4% in a single day, the Nasdaq dropped roughly 5.4% and slid into a correction (a fall of 10% or more from its recent high), and the Dow lost 1,833 points. All 11 sectors of the S&P 500 finished lower. Around $2.5 trillion in market value was wiped from Nasdaq-listed companies in one session.
The trigger was growing doubt about the AI spending boom. Investors questioned whether the huge sums going into chips and data centers can keep growing at the pace stock prices assumed, and some positioned for a slower data-center buildout after the midterm elections. Chipmakers and AI infrastructure suppliers were hit hardest.
Friday: a partial rebound
Chip stocks bounced on Friday, with the Philadelphia Semiconductor Index up about 4%, lifting the Nasdaq 1.1%. The Dow slipped as Treasury yields rose after a strong jobs report. Even after the rough week, the S&P 500 sits only about 5.7% below the record high it set in October.
Strong jobs, higher yields
Employers added 165,000 jobs in October, far above the roughly 59,000 economists expected, and unemployment dipped to 4.1% from 4.2%. Good news for the economy, but it pushed the 10-year Treasury yield up to about 4.87% and kept the possibility of another Federal Reserve rate increase in December on the table. Higher rates make future company profits worth less today, which weighs most on high-priced growth stocks. Background: October jobs report and the Fed and why the Fed raises interest rates.
Why your “diversified” index fund fell so much
The S&P 500 is weighted by company size, and a handful of tech and AI giants now make up a large share of it. Nvidia alone is around 8% of an S&P 500 fund. So when AI stocks fall hard, funds like SPY and VOO feel it too. A total market fund such as VTI is similar. Funds with less tech, like the dividend ETF SCHD, often hold up better in weeks like this, though they tend to lag when tech leads.
What it means for your money
- Drops like this are normal. The S&P 500 has historically fallen 10% or more about once every year or two on average, and recovered every time over the long run.
- Selling after a big fall locks in the loss. Some of the market’s best days come right after its worst, as Friday showed.
- Keep investing on schedule. Regular contributions buy more shares when prices are lower. See dollar cost averaging vs lump sum.
- Check your mix, not the headlines. If this week kept you up at night, you may hold more stocks than suits you. Money you need within a few years belongs in a high-yield savings account, not the stock market.
Watch the whole market at a glance on our live stock heatmap, and learn how to read it in how to read a stock market heatmap.
What to watch next week
- Whether buying spreads beyond chip stocks, or the AI sell-off resumes.
- New inflation data, which will shape the Fed’s December decision. See what is CPI.
- Comments from big tech companies on their AI spending plans.
Frequently asked questions
Why did the stock market drop this week?
Mainly a sharp sell-off in AI and chip stocks on Thursday, driven by doubts about how long heavy spending on AI infrastructure can continue. Rising Treasury yields after a strong jobs report added pressure.
Is the Nasdaq in a correction?
Yes. After Thursday’s drop the Nasdaq was more than 10% below its recent high, which is the usual definition of a correction.
Should I sell my index funds?
For long-term investors, history suggests staying the course. Corrections are common and have always been followed by recoveries, though the timing is never certain. Make sure money you need soon is not in stocks.
This article is general information, not financial advice.
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