Nasdaq falls over 4% as SpaceX, Tesla and chip stocks slide after Democrats' midterm sweep

US technology shares had their worst day in months on Thursday 5 November. The Nasdaq Composite fell more than 4%, and more than 5% at one point in early trading, as investors sold AI and chip stocks two days after the Democrats won control of both houses of Congress, the BBC reported. The S&P 500 lost 2.7%, Cointelegraph reported. New York opens at 7:30 pm PKT, so the selling ran through the Pakistani evening.

The biggest fallers

• SpaceX: down more than 7% in early trading. Musk spent nearly $450 million backing Republican campaigns, including at least $45 million for Ken Paxton in Texas, which the Democrats won.
• Tesla: down more than 9%.
• Chipmakers, over five days: AMD down nearly 17%, Micron more than 20%, Intel more than 18% and Nvidia more than 10%. The Philadelphia Semiconductor Index has lost more than 13%.

Why AI stocks are falling

Data centres became an election issue. Democrats won in key data-centre states, and Texas governor-elect Gina Hinojosa campaigned for a moratorium on new data-centre construction. Investors now expect tougher scrutiny of the power-hungry sites that AI companies are racing to build.

Tech leaders admitted they had misread the mood. OpenAI president Greg Brockman said at a Wall Street Journal conference that "you can't just tweet and say: 'This is going to be good.' You need to be in those communities." Meta president Dina Powell McCormick said the industry needed to "double and triple down on telling the story". Some investors also worry that AI shares were in a bubble that was due a correction.

The sell-off spread to crypto: bitcoin fell more than 6% to a seven-week low of $75,463 (our bitcoin price page tracks it).

What it means in Pakistan

• PSX went the other way: the KSE-100 rose nearly 2% on Thursday, Business Recorder reported. Our KSE-100 page has the close and history.
• Freelancers and IT firms that sell to US tech companies watch these swings: a sustained fall in AI spending would mean fewer contracts. One bad day does not mean that.
• Holding US shares or dollar assets? The rupee value depends on the exchange rate as well as the share price; our currency converter works it out at today's rate.