Dow surges 3% as semiconductor stocks plunge... The paradox of a Democratic landslide

【Financial News, New York = Special Correspondent Lee Byung-cheol】  New York stocks surged on the 4th (local time) as a “blue wave” became reality in the U.S. midterm elections, with Democrats taking control of both the House and Senate. Oil prices plunged on hopes that Democratic control of Congress could bring an early end to the war in Iran, while easing political uncertainty also improved investor sentiment. Semiconductor and data-center stocks, however, fell sharply on concerns that regulations on AI data-center construction could tighten, diverging from the gains among major technology companies.
On the New York Stock Exchange (NYSE) that day, the Dow Jones Industrial Average rose 1,569.40 points (3.03%) from the previous session to close at 53,356.12. The S&P 500 gained 119.70 points (1.58%) to 7,688.62, while the Nasdaq Composite rose 364.50 points (1.44%) to 25,736.51.
The market climbed on expectations that Democratic control of Congress would strengthen checks on the Trump administration’s policy agenda and reduce the likelihood of abrupt policy changes. Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, told Reuters, “Stocks rallied sharply as uncertainty diminished once the election results became clear,” adding, “Political gridlock often acts as a positive for stocks.”
Hopes for an early end to the war in Iran also supported the rally. December WTI crude fell 8.29% to $88.12 a barrel, while January Brent crude dropped 8.67% to close at $94.62.
AI-related stocks, however, had mixed fortunes. As Democrats made gains in areas with dense concentrations of data centers, including Texas and Georgia, expectations spread that regulations on new data-center construction and electricity use could tighten. The market also reflected concerns that a slowdown in data-center expansion could dampen new demand for AI semiconductors and server equipment.
Data-center operator Hut 8 plunged 23.2%, IREN Limited fell 11.2%, Core Scientific dropped 10.4%, and Applied Digital lost 6.7%. NVIDIA also declined 3.1%, while the PHLX Semiconductor Sector Index fell 3.1% to its lowest level in six months.
Scott Chronert, head of U.S. equity strategy at Citi Research, said, “If the pace of data-center construction slows, it could alter the fundamental growth trajectories of many suppliers to the sector.”
By contrast, Big Tech companies with vast cash reserves rose. The gains reflected hopes that slower data-center construction would reduce the capital burden of investing in AI infrastructure and could strengthen the competitive position of large companies that already have facilities in place. Microsoft gained 6.7%, Amazon rose 6.1%, Alphabet climbed 3.2%, and Meta advanced 1.4%.
Companies closely tied to President Trump also weakened. Trump Media & Technology Group plunged 24.5%, while Tesla and SpaceX fell 3.3% and 3.8%, respectively. Defense stocks also declined amid the possibility of congressional checks on an expansion of the defense budget, with Lockheed Martin down 6.9% and Northrop Grumman down 4.5%. Solar and clean-energy stocks, by contrast, rose on hopes that Democratic policy support would remain in place.


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