The sharp rally in US stocks after the midterm elections lasted just one day. On Nov. 5, investors sold technology and AI-related shares, sending the Nasdaq down about 5.2% intraday and the S&P 500 down 3.8%. The Dow Jones Industrial Average fell more than 1,500 points, or about 2.9%. US stock market value briefly declined by roughly $3 trillion as investors reassessed limits on data-center construction and the outlook for AI investment.
Semiconductor stocks lead the decline
By early Thursday afternoon, the Philadelphia Semiconductor Index was down about 9.75%, after falling as much as 11% intraday. It was on track for its steepest one-day decline since March 2020. AMD and Micron each dropped about 15%, while Nvidia fell nearly 9%. Tesla slid as much as 10%; Qualcomm lost 11.2% and Arm Holdings fell 11%.
The S&P 500 touched an intraday low of 7,394.49, below its closing level on Election Day. The sell-off was concentrated in technology, but four of the index’s 11 sectors still rose. Consumer staples gained 1.5%, and Berkshire Hathaway shares reached a record high. Oil prices also rebounded after a sharp drop the previous day.
The sell-off came on the second trading day after the post-election rally. On Wednesday, the Dow rose 1,569 points, or 3%—its biggest one-day gain after a midterm election in 44 years. The S&P 500 added 1.6% to close at 7,688.62. Oil fell more than 8% that day as investors bet that divided government could produce a steadier policy environment.
Data-center limits weigh on AI infrastructure stocks
Election results raised concerns that data-center expansion could face obstacles. Of 41 ballot measures related to slowing data-center construction, most passed, with Ohio standing out. On Wednesday, data-center power supplier Vistra fell 14% and infrastructure company Vertiv dropped 13%. Nvidia declined only about 3%, while some other large technology companies gained. At that point, the market had priced in some risk of construction restrictions in parts of the supply chain; the subsequent sell-off spread to major technology and chip companies.
Texas has become a particular focus for investors. Democrat Gina Hinojosa defeated Republican Governor Greg Abbott and has called for an immediate pause on new data-center projects. Wells Fargo estimates that 27% of planned US data-center capacity is in Texas. Ohio’s Amy Acton and Georgia’s Keisha Lance Bottoms have also supported limits on data-center development.
The dispute is not simply a matter of party politics. Abbott suspended new data-center permits in September pending a review of the power grid. Hinojosa campaigned on extending the pause. Abbott’s suspension of grid connections has already frozen data-center permits, meaning Hinojosa may be able to maintain the restrictions without advancing new legislation.
Asian losses precede broader US tech sell-off
Asian markets fell first in overnight trading. South Korea’s KOSPI closed down 5.28% after a trading halt was triggered during the session. Taiwan’s main index lost 3.2%, and Japan’s Nikkei fell 1.79%. The subsequent declines in major US technology shares showed that concerns had spread beyond data-center operators and infrastructure suppliers to the wider AI investment chain.
Wednesday’s rally reflected optimism about the election result and policy stability. The sharp reversal the next day underscored that investors are still weighing whether local permitting, electricity supply and investment in AI infrastructure will allow projects to proceed as planned. Key points of focus include the Texas grid review, the status of data-center permits and how affected companies adjust their expansion plans.