Wall Street slides as AI stocks tumble after Democratic win fuels regulation fears

Wall Street plunged Thursday as AI‑heavy stocks fell sharply following the Democrats’ midterm victory, which sparked worries of tighter AI regulation. The Nasdaq Composite dropped 4.95% to 24,463.34, putting it on track for a technical correction, the biggest one‑day decline since the April 2025 “Liberation Day” sell‑off. Nvidia led the slide, shedding 6.4%, while the Philadelphia SE Semiconductor index fell nearly 11%. The broader Nasdaq‑100 slid about 5.4%, erasing more than $2.2 trillion in market value. Meta Platforms fell 5.7%, Amazon 4.3%, Alphabet 3%, and Qualcomm slumped 13.5% after missing fourth‑quarter smartphone chip sales estimates. Tesla and SpaceX, both backed by Elon Musk, each tumbled over 10%, despite Musk’s recent half‑billion‑dollar support for Republican candidates. Data‑center operators IREN, Applied Digital, CoreWeave and Nebius Group, along with AI‑linked suppliers GE Vernova and Constellation Energy, also saw steep losses. “Investors appear to be recognizing that some newly elected members of Congress and governors are looking to slow the pace of AI infrastructure development,” said Melissa Brown, global head of investment decision research at SimCorp. The Dow fell 2.15% to 52,209.29 and the S&P 500 dropped 3.20% to 7,440.29, their largest one‑day moves since April 2025. Seven of eleven S&P sectors closed lower, with tech and consumer discretionary leading, while energy rose. Declining issues outnumbered advancers 2.45‑to‑1 on the NYSE and 3.56‑to‑1 on the Nasdaq. The market had rallied on Wednesday as easing political uncertainty boosted risk appetite, but analysts warn a divided government could stall fiscal decisions. Federal Reserve presidents Beth Hammack and Thomas Barkin hinted future rate hikes, and traders now eye Friday’s October non‑farm payrolls for clues on the Fed’s next move.

Context

The correction rule means a 10% fall from a market’s recent high; the Nasdaq’s drop brings it close to that level. AI‑related stocks are sensitive because their growth relies on rapid data‑center build‑out, which could slow if new lawmakers push tighter rules. Market moves often mirror political shifts, especially when policy could affect high‑growth sectors like AI.