Nasdaq enters correction as Democratic sweep sparks AI fears
Wall Street fell sharply on Thursday as investors priced in tougher Democratic scrutiny of artificial intelligence and data centres: the Nasdaq dropped as much as 5%, more than 10% below its record close, on course for its worst day in eighteen months, and the Dow lost 2.5%, or 1,346 points. The S&P 500 was 3.5% lower by 17:30 GMT on CNBC’s feed. The FTSE 100 closed down 0.4% at 10,782 after rising 100 points earlier.
The volatility index jumped 40% to its highest since the early weeks of the Iran war, and AJ Bell’s Danni Hewson said the Nasdaq had “lost more than $1.8 trillion worth of value in intraday trading” as “investors are fearful of a regulatory backlash against the AI sector from newly elected Democratic lawmakers”. Texas’s governor-elect, Gina Hinojosa, has pledged a moratorium on data-centre construction. Nvidia fell around 8%, AMD 13% and Intel 5.5%; over five days Micron is down more than 20%. SpaceX shares, listed only recently, fell more than 7% and Tesla more than 9%, with Elon Musk having spent nearly $450m backing Republicans, including at least $45m on Ken Paxton’s losing Texas Senate campaign. Qualcomm slid 9% on weak guidance, its handset chip sales down 26%, though its chief executive insisted “we don’t have a demand issue; it’s a supply issue”. Both the S&P 500 and the Nasdaq touched their lowest levels since late July. European indices had outperformed in the morning before the American open turned the day.