Nasdaq sees worst day in 19 months as investors bet on AI slowdown after Democrats’ election triumph

THE NEWS

What happened

The Nasdaq experienced its worst single-day decline in 19 months, dropping 5.5% as investors reacted to midterm election results favoring Democrats. Markets anticipate stricter federal and state regulations on AI data center expansion, leading to a sharp sell-off in chip stocks like Nvidia and memory makers. The event signals a potential slowdown in the AI buildout pace following Democratic victories in key gubernatorial races.

CONTEXT

Why it matters

Wall Street's tech-heavy Nasdaq tumbled 5.5%, its worst day in nearly two years, after Democrats won key midterms. Investors are betting on stricter regulations for AI data centers, causing massive losses in chip stocks like Nvidia and SanDisk. The VIX fear index surged 61% as markets brace for a slowdown in the AI boom.

AT A GLANCE

Key facts

• Nasdaq composite fell 5.5%, entering correction territory more than 10% below recent highs.
• Over $2 trillion was shaved off the Nasdaq's value by Thursday's close.
• Chip stocks led the decline, with SanDisk down 22% and Western Digital down 17%.
• The VIX fear index jumped 61% to levels not seen since early 2025.
• Democratic victories in gubernatorial races and local ballots suggest tighter scrutiny on new data center projects.
• Nvidia was the top faller on the Dow Jones Industrial Average, dropping 9.2%.
• Analysts warn of a momentum unwind as regulatory hurdles increase for AI legislation.