Nasdaq 100 drops 6.36% in worst day since March 2020 as credit markets stay calmer

The Nasdaq 100 lost 6.36% on Thursday during an accelerating AI stock selloff, recording the index's largest daily decline since March 2020. The S&P 500 declined 4.36%. Major index constituents collectively shed more than $2 trillion in market capitalization during the session. Nvidia shares dropped 9.3%, erasing about $447 billion in market value. Micron Technology lost 17.5%, reducing Micron's market capitalization by roughly $157 billion. SanDisk shares declined 22.3%. However, Micron and SanDisk remained among this year's strongest performers, with respective gains of 122% and 230% in 2026.

Democrat Gina Hinojosa's defeat of Texas Governor Greg Abbott triggered the selloff after Hinojosa promised an immediate moratorium on new data centers. Wells Fargo puts Texas's share of planned U.S. data center capacity, measured in gigawatts, at 27%. Gavan Nolan, executive director and co-head of fixed income pricing research at S&P Global Market Intelligence, said Thursday's credit market impact had remained relatively limited. S&P Global Market Intelligence data showed the CDX North America Investment Grade index increasing from 59 to 62 basis points on Thursday. The move returned the index to Tuesday's level, reversing the tightening after the election.

Investment-grade credit spreads have been increasing for months. Amazon's five-year credit default swaps have almost doubled since mid-April, reaching 100 basis points. Alphabet's swaps increased from 47 to 92 basis points over the same period.

Nolan identified CoreWeave as having one of North America's more liquid single-name high-yield credit default swaps. CoreWeave's contract rose from 20 to 23 points upfront on Thursday, using the pricing convention for distressed borrowers. The contract had stood at 2 points in mid-April. Nolan said CoreWeave's credit had already been under pressure before the midterms, so Nolan did not consider the election the cause. CoreWeave's credit default swaps reference senior unsecured debt. CoreWeave has also obtained financing through leveraged loans, asset-backed transactions and private credit, with those loans ranking ahead of the bonds. That ranking has prompted investors to demand substantially greater compensation for the risk of failing to recover invested funds. Nolan identified the neocloud sector as the current center of credit pressure. Nolan said hyperscalers remain strong credits and finance much of their spending from operating cash flow. However, CoreWeave depends entirely on AI and has a concentrated customer base.

Nolan said slower infrastructure construction would not necessarily be negative for credit investors. Nolan said investors had struggled to absorb the large volume of hyperscaler bond issuance, partly explaining the wider spreads. However, Nolan declined to predict whether construction would slow.

Oracle retains a triple-B credit rating. Oracle's five-year credit default swaps reached 305 basis points on Thursday, compared with 174 in mid-April. Nolan said that pricing normally corresponds to borrowers rated between double-B and single-B. However, Nolan said the pricing did not necessarily imply a downgrade below triple-B.

Space Exploration Technologies, or SpaceX, saw credit default swaps rise 26 basis points to 296 on Thursday, leaving a gap of just 9 basis points below Oracle. Oracle's swaps had stood apart from comparable borrowers only a few weeks earlier. Nolan said SpaceX also carries a triple-B rating but trades at levels more typical of high-yield borrowers. SpaceX shares declined 9% on Thursday. Oracle shares fell 6.9%. The iShares iBoxx $ High Yield Corporate Bond ETF declined only 0.3%.

Equity prices reflect expectations of a breakdown in the AI infrastructure buildout. However, credit prices currently reflect stress concentrated among borrowers most reliant on external capital.