Stocks Plunge as Dem Midterm Sweep Fuels AI Regulatory Concerns
The Nasdaq entered correction territory as a sharp selloff in AI and semiconductor stocks swept across Wall Street. U.S. stocks experienced a significant drop on Thursday, with the Dow Jones Industrial Average falling 1,833.06 points, or 3.44%, and the Nasdaq Composite closing 5.52% lower—its worst day since April 2025.
Market Performance
- Dow Jones Industrial Average: 51,285.73 (-237.33, -0.46%)
- S&P 500: 7,376.86 (+23.13, +0.31%)
- Nasdaq Composite Index: 24,579.42 (down at least 10% from its Oct. 6 record high)
Affected Sectors
Technology and chip stocks were the hardest hit, with Nvidia sinking 9.26% and the Philadelphia Semiconductor Index plunging over 12%. Other notable declines included:
- Meta Platforms: 3.96%
- Amazon (AMZN): -0.91%
- Alphabet (GOOGL): +0.78%
- Tesla: 10.77%
- SpaceX (SPCX): 9.05%
Underlying Factors
The sell-off follows the Dem midterm election victories, raising concerns about AI regulation and data center development. Rising electricity prices have turned the construction of power-hungry data centers into a political issue, with some Democrats advocating for restrictions or delays.
"The market’s interpretation is that the AI infrastructure buildout will become slower and more expensive, which is rewriting growth expectations across the whole supply chain," said eToro market analyst, Jakub Rochlitz.
The losses extended to companies supplying power and equipment to the AI boom, including GE Vernova and Constellation Energy.
Market Outlook
Analysts suggest the scale of the declines indicates a shift in sentiment, potentially leading to further selling, especially in Asia markets on Friday.
"This feels like the capitulation phase for the data center capex beneficiary stocks, especially the semiconductors," Jed Ellerbroek, portfolio manager at Argent Capital Management, told Reuters. "But I think the magnitude of the moves is outsized."