The US tech stock sell-off, Democratic sweep of Congress raises AI regulation concerns

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

According to MSX.COM data, AMD (AMD.O) fell 12%, Micron Technology (MU.O) fell 9%, SK Hynix (SKHY.O) fell 8.8%, Nvidia (NVDA.O) fell 5%, and the Philadelphia Semiconductor Index plunged 8%, hitting its lowest level since April 20. The Nasdaq Composite Index has fallen more than 10% from its record closing high set on October 6. Investors worry that the Democratic Party controlling both chambers of Congress and winning key gubernatorial elections could lead to more regulation of AI infrastructure construction 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 may face more volatility.