Wall Street's Winners and Losers [U.S. Midterm Elections]

[Financial News]  

Wall Street is also seeing winners and losers emerge as Democrats scored a landslide victory in the U.S. midterm elections.
As opposition from local residents to AI data center construction has intensified, Democrats—who have championed regulation—have taken control of Congress, making it increasingly likely that Big Tech will have less room to maneuver.
The Wall Street Journal (WSJ) reported on the 4th (local time) that investors are preparing to reshape their portfolios amid a Washington political landscape divided between a Republican White House and a Democratic Congress.

President Donald Trump initially conceded defeat in the election and called for bipartisan cooperation. He said he would work with Democrats. Relieved by this, markets rose sharply on the 4th, the day after the election, led by industrial stocks.
It is also positive that investors most welcome a political arrangement in which power is divided between Congress and the executive branch, allowing them to check each other.
Ron Albahari, chief investment officer (CIO) at LNW, which manages the assets of wealthy families, said, "I think equity investors also breathed a sigh of relief that the president accepted the results." In other words, concerns that the president might portray the election as fraudulent and refuse to accept the outcome have eased.
Albahari also thought Trump might pursue bipartisan cooperation with Democrats to leave a legacy of accomplishments.

However, AI, which has driven the market's rally so far, could face headwinds.
Albahari warned, "One risk is the possibility that federal AI regulation will resume, limiting the development of AI infrastructure."
Democrats have already won gubernatorial races in five key states slated to host data centers, prompting forecasts that new construction could proceed more slowly.
In areas including Texas and Ohio, discussions have intensified about the effects data center construction could have on nearby communities, including electricity bills and water use.
Elon Musk, who went all in on the Republican Party and suffered a setback, posted on his social media platform X on the 4th, "Space-based data centers have become quite attractive now." SpaceX shares plunged nearly 4% that day.
Among AI-themed stocks, highly speculative names—including neocloud provider CoreWeave—plunged.
Utilities such as NRG Energy, which supplies power to AI data centers, and construction companies were also hit hard.
Even key semiconductor stocks were caught in the downdraft.
Bob Elliott, CEO of Unlimited Funds, said, "In a world where the AI boom is everything, the significance of the midterm election results is profound," adding, "This election was a wake-up call for industries based primarily on unproven growth projections."

Investors have also begun to hope that Congress can resume its traditional role of checking presidential power. They expect it to pressure the White House to end the war with Iran and bring trade conflicts with trading partners to a close.
Shares of defense contractors including RTX (formerly Raytheon), Lockheed Martin and Northrop Grumman fell as a result. Investors factored in the possibility that Congress could reject the administration's massive demands for increased military spending.
For now, however, Trump still holds sweeping powers. In particular, there will be no force to check him before the new Congress is seated. He may use this window to resume airstrikes on Iran and introduce tariffs targeting specific industries.
In an analysis note on the 3rd, Glenmede analysts said, "Some of the administration's priority policies, including trade, immigration, foreign affairs and deregulation, can continue through executive orders."

Hopes are rising that green energy and healthcare will benefit now that Democrats have taken control of Congress again.
Turbine makers Vestas and Nordex, along with offshore wind power company Ørsted, jumped. Solar power companies including First Solar, OCI Holdings and SMA Solar also all rose sharply.
Investors were betting that the Trump administration's efforts to curb renewable energy could change course under congressional pressure.
Healthcare stocks such as Centene, HCA Healthcare and Universal Health also gained. The Democratic Congress has gained leverage in negotiations with the president to secure greater funding for Obamacare.

One of the hardest-hit stocks that day was Trump Media, which operates the social media platform Truth Social. Trump Media plunged more than 16%.
Trump Media's share price tends to move in tandem with President Trump's political future.
After plunging by double digits that day, the stock fell to an all-time low.

[email protected] Song Gyeong-jae Reporter