Fallout from Democrats’ landslide victory: U.S. Nasdaq plunges 4%

【Lee Byeong-cheol, Financial News correspondent in New York】  U.S. stocks plunged as concerns spread that regulation of the artificial intelligence (AI) industry could be tightened after Democrats took control of both the House and Senate in the U.S. midterm elections. The tech-heavy Nasdaq fell nearly 4%, entering correction territory, while shares of major semiconductor companies including NVIDIA and Broadcom Inc. also plunged across the board. The New York stock market, which had surged the previous day as political uncertainty eased following the Democrats’ landslide victory, reversed course in a single day.
As of 11:36 a.m. local time on the 5th, the Nasdaq Composite Index stood at 24,726.14, down 3.93% from the previous trading day. It had fallen 10% or more from the record high set last month, entering a technical correction.
The S&P 500 also fell 2.8%. The Dow Jones Industrial Average dropped 1,153 points (2.2%), giving back most of the previous day’s gains. Some stocks, including Chevron and Johnson & Johnson, rose, but that was not enough to stem the selling pressure spreading mainly among tech stocks.
AI-related stocks were at the center of the market’s plunge that day. Semiconductor companies NVIDIA and Broadcom Inc. each fell 6%, while software company Oracle also dropped 6%. Qualcomm shares plunged 11% after the company reported earnings above market expectations but its outlook for future earnings fell short of expectations. The iShares Semiconductor ETF (SOXX), which invests in major semiconductor companies, fell 8%.
Losses were even steeper among AI data center and cloud infrastructure companies. CoreWeave fell 9%, while Nebius and IREN Limited plunged 13% and 14%, respectively. Tesla also dropped 9%.
Investors sold off AI-related stocks in large numbers amid concerns that the Democrats’ landslide win in the midterm elections could lead to tighter regulation of the AI industry. The Democrats retook both chambers of Congress in this election and also won major gubernatorial races. As a result, the possibility of tighter regulations concerning AI data center construction, power use and environmental issues has come into focus.
In particular, speculation that the expansion of AI capital investment—which had driven growth in the U.S. economy and stock market over the past three years—could be affected dampened investor sentiment.
Orion Chief Investment Officer (CIO) Tim Holland told CNBC, “Investors are stepping back from the market until they get a little more clarity on how the midterm results might affect the AI capital investment cycle in particular.”
He explained, “AI capital investment has been the most powerful driver of growth in the U.S. economy over the past three years. The key is what policy stance the Democrats, who won overwhelmingly in elections at the federal and state levels, will take going forward.”


[email protected] Correspondent Lee Byeong-cheol Reporter