The main U.S. stock indexes on Thursday posted their steepest declines since April 2025, when President Donald Trump introduced global tariffs on “Liberation Day.” The cause was fear that after the Democrats’ victory in the congressional elections, the artificial intelligence industry will come under tougher oversight.
On Wall Street, the Dow Jones Industrial Average fell 3.4%, the S&P 500 index of the largest companies dropped 4.4%, and the tech-heavy Nasdaq Composite lost 5.5%. The Philadelphia Semiconductor Index fell even more sharply, by more than 12%. The drop continued a slide in the AI-driven sector that has been under way since October, but its scale made Thursday the worst day on the stock market since “Liberation Day,” when Donald Trump announced steep tariffs on products from around the world.
As The New York Times notes, on Wednesday, the day after the election in which Democrats won majorities in the House of Representatives and the Senate, the market reacted positively because of the clarity of the victory and the prospect of divided power in Washington, which is not conducive to new regulations.
On Thursday, however, sentiment shifted. The fear of stepped-up oversight of AI was joined by doubts, growing for weeks, about the enormous spending and borrowing by tech companies to develop artificial intelligence. Observers also noted that Democrats took power in states that are becoming major data center hubs, which could signal a slowdown in the buildout of AI infrastructure. Investors may also have been frightened by reports that Democrats plan to launch investigations into tech companies and other firms that, in their view, may have been involved in shady dealings with the White House.
Chipmakers lost the most. Qualcomm shares fell 9.5%, partly because of a profit forecast weaker than expected. Arm Holdings lost 13.1% after revenue from its AI segment came in below expectations. Shares of Nvidia, on which much of the industry relies, dropped 9.3%.
For the second day in a row, shares of Tesla and SpaceX, led by Elon Musk, the world’s richest man and the Republican Party’s largest donor, fell sharply. Musk can expect congressional investigations into some matters involving his businesses. Democrats have announced probes, including one into the slowdown of the Starlink network for Ukraine.
As the Times writes, some analysts believe that a slower pace of AI investment could strengthen the position of the biggest players and ease pressure on their budgets. Frank Flight of Citadel Securities assessed that a slowdown would be more beneficial for companies that spend money on infrastructure than for those that earn money from that spending, namely chipmakers.
From Washington, Oskar Górzyński (PAP)
