According to Jin10, U.S. stocks surged Wednesday after Democrats won the midterm elections, but the Nasdaq Composite plunged Thursday as investors pulled out of technology stocks for a second consecutive session. The Nasdaq fell 3.3%, while the S&P 500 dropped 1.9%. The Dow Jones Industrial Average lost 489 points, or 0.9%. Gains in stocks such as Chevron and Johnson & Johnson were not enough to offset the drag from the technology sell-off.
AI-related stocks, particularly chipmakers and data center-related companies, declined for a second straight day. AMD fell 12%, Micron Technology dropped 9%, SK Hynix lost 8.8%, and Nvidia fell 5%. The Philadelphia Semiconductor Index dropped 8%, its lowest level since April 20. The Nasdaq Composite is down more than 10% from its closing record high set on October 6.
Investors are concerned that Democrats’ control of both chambers of Congress and victories in key gubernatorial races could lead to more regulation of AI infrastructure construction across the United States. Jordan Watson, a portfolio manager at Tandem Investment Advisors, said the stock market rally and the trend of money leaving AI stocks may be temporary. The market may face more volatility as investors digest the election results and their potential policy effects.