AI and data-center stocks lead a broad market sell-off after midterms
U.S. stocks fell sharply Thursday, reversing much of Wednesday’s post-election rally. Analysts cited concern over data-center restrictions following Democratic gains, alongside existing questions about AI spending, debt and earnings.
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The market move
CNN reported the Nasdaq’s approximately 5.5% decline, its worst day since April 2025. The selling spread to Asian and European markets Friday. The Nasdaq entered correction territory, at least 10% below its October record. South Korea’s Kospi and Japan’s Nikkei each closed about 6% lower Friday, CNN reported.
New York Post reported closing declines of 3.44% for the Dow and 4.36% for the S&P 500, and heavy losses in chipmakers and data-center companies. The selling followed a post-midterm rally Wednesday.
Politics and other factors
Business Insider and New York Post linked investor concern to the possibility that newly elected Democrats will restrict AI development or data-center projects. New York Post reported that Texas Gov.-elect Gina Hinojosa campaigned on a data-center moratorium.
Analysts quoted by Business Insider cited borrowing costs, uncertain returns on AI investment and crowded trades. New York Post reported large paper losses and said disappointing tech earnings added pressure.
Why this matters
The market response reversed within a day. Reports attribute it to several factors, not to an enacted policy: the next Congress has not yet taken office.