AI tech stock sell-off on Wall Street after Democratic midterm victory, Digi Mart USA News (New York): U.S. stocks fell sharply on Thursday, with no clear trigger identified by analysts.
The technology-heavy Nasdaq index closed down 5.5 percent on the New York Stock Exchange, while the broader S&P 500 fell 4.4 percent, its worst day since April of last year.
Roughly three trillion dollars in market value was wiped out in the session. Avanza market strategist Elin Benjaminsson said she was surprised by the speed of the decline, calling it something of a shock.
One possible explanation is the Democratic Party’s strong showing in the midterm elections. Investors worry that the party’s gains could lead to stricter regulation and slow the massive expansion of AI data centers in the United States, particularly in Texas, where many large facilities are planned.
Several major U.S. technology companies saw their shares plunge, according to CNBC.
Tesla fell nearly 11 percent and SpaceX dropped 9 percent. Chipmakers Nvidia and Broadcom fell 9 and 10 percent respectively, and software giant Oracle also posted steep losses.
The Democratic victory was already clear on Wednesday, when U.S. stocks performed relatively well.
Many technology companies had recently reported strong results, but investors increasingly want firmer evidence that they can turn profits before committing more money.
Benjaminsson believes part of the decline may be a snowball effect. Large falls can trigger forced selling and a wave of panic in the market.
The Stockholm exchange has so far held up far better. The broad OMXSPI index closed down 0.12 percent.
Still, Swedish small investors could be affected, since many global index funds hold large positions in U.S. technology companies that have invested heavily in AI.
Benjaminsson advises savers to review how much of their money is invested in such companies. She cautioned that the biggest mistake is selling in a panic, but investors should understand the risks they hold.
