US tech stocks hit by sell-off wave, Democratic sweep of Congress raises AI regulation concerns

Odaily reports: After Democrats won the midterm elections, US stocks surged on Wednesday, but the Nasdaq Composite plunged on Thursday as investors retreated from tech stocks for a second consecutive trading day. The tech-heavy Nasdaq fell 3.3%, while the S&P 500 dropped 1.9%. The Dow Jones Industrial Average fell 489 points, or 0.9%. Although gains in stocks such as Chevron and Johnson & Johnson were not enough to offset the drag on the Dow from the tech sell-off. AI-related stocks, particularly in the chip sector and data center-related names, declined for a second straight day.

According to MSX.COM data, AMD (AMD.O) fell 12%, Micron Technology (MU.O) dropped 9%, SK Hynix (SKHY.O) declined 8.8%, and Nvidia (NVDA.O) fell 5%. The Philadelphia Semiconductor Index plunged 8%, hitting its lowest level since April 20. The Nasdaq Composite has fallen more than 10% from its record closing high set on October 6. Investors worry that Democratic control of both chambers of Congress and victories in key gubernatorial races could lead to more regulation of AI infrastructure development across the United States. Jordan Watson, portfolio manager at Tandem Investment Advisors, said the stock market rally and the trend of capital fleeing AI stocks may be temporary. But as investors digest the election results and their potential policy implications, the market could face further volatility.