Dow Drops After Midterm Shock

Investors faced a sharp reversal in equity markets on Thursday. The Dow Jones Industrial Average fell 1,220 points, a 2.2% decline. This drop erased most of the 1,570 point gain the index recorded on Wednesday.

The sell-off pushed the tech-heavy Nasdaq Composite down 4.8%. That loss placed the index into correction territory, defined as a drop of more than 10% from its recent peak. The S&P 500 also declined by 3.2% during the session.

Shares in artificial intelligence firms led the decline. Nvidia, a major supplier of semiconductors for AI products, saw its stock fall 7%. Advanced Micro Devices dropped 12%, and SanDisk lost more than 15% of its value. Investors appeared to price in risk related to the newly empowered Democratic majority.

Other major technology companies also saw losses. Microsoft, which holds a large stake in OpenAI, fell by more than 2%. Amazon, which has invested heavily in AI infrastructure, also dropped more than 2%.

The market swing followed Tuesday's midterm elections. Democrats won Senate and gubernatorial races in Republican-leaning states like Ohio and Texas. Both states host numerous AI data centers. Democrats also secured a path to a comfortable majority in the House of Representatives.

Yorkville analyst Dan Ives warned of the political shift's impact on the sector. He told ABC News that the Democratic victory was a seismic shift that would negatively affect the pace of AI development in the United States for the coming years.

OpenAI responded to the election results on Thursday by announcing new data center policies. The company stated it would pay for all electricity and infrastructure used at its facilities. It also committed to creating a water plan for each site to protect local resources and to generate employment opportunities for local workers and businesses.