Following the conclusion of the midterm elections and Wednesday's sharp rally on Wall Street, the Dow Jones Industrial Average was poised to extend its gains on Thursday; however, capital flowed out of technology stocks for a second consecutive trading day.
The Dow rose 0.58%, the S&P 500 fell 0.17%, and the Nasdaq dropped 0.89%.
Among the "Magnificent Seven": Amazon gained 2.03%, Google rose 1.67%, Apple climbed 1.38%, Meta Platforms edged up 0.09%, Microsoft slipped 0.10%, Nvidia fell 2.47%, and Tesla dropped 3.51%.
Financial stocks including Goldman Sachs, JPMorgan Chase, and American Express each rose more than 1%, leading the Dow higher. However, stocks tied to the artificial intelligence sector, particularly in chips and data centers, declined for a second straight day. The market is concerned that Democratic control of both chambers of Congress, along with wins in several key gubernatorial races, could slow the pace of AI computing infrastructure construction across the country. Broadcom shares fell nearly 3%, Nvidia dropped close to 2%, and software companies such as Oracle declined more than 1%. Additionally, Tesla and SpaceX, both under Elon Musk, each fell more than 3%. Chip company Qualcomm reported earnings that beat expectations, but its guidance fell short of market forecasts, sending its shares plunging 12%. Amid concerns that state-level midterm ballot measures could impose restrictions on data center projects, emerging cloud providers saw broad declines: CoreWeave fell nearly 4%, while Nebius and Iren each dropped more than 3%. Some individual stocks bucked the trend: AI advertising service provider AppLovin surged 19% after both its results and guidance exceeded expectations.
Wednesday's market action reflected investors digesting the midterm election results, with Democrats securing solid majorities in both the Senate and the House. The Dow posted its best single-day performance since April 2025, while the S&P 500 and Nasdaq Composite each gained more than 1%. Jordan Watson, portfolio manager at Tandem Investment Advisors, said the rally and the rotation away from AI-related stocks may prove temporary. "As investors digest the election results and their potential policy implications, market volatility could rise further," he said. "I don't view Wednesday's stock market performance as a signal that all risks have been removed; on the contrary, it serves as a reminder that the market needs to rationally assess the massive amounts of capital flowing into AI infrastructure and whether those investments can deliver returns in line with expectations."
In transatlantic markets: the pan-European Stoxx 600 rose 0.71%; the UK's FTSE 100 gained 1%, hitting a three-month high; France's CAC 40 rose 1.1%; and Germany's DAX advanced 0.74%. In Asia, Japan's Nikkei 225 rose 0.49% on Thursday, while the Topix gained more than 2%; South Korea's Kospi fell 2.33%, and the tech-heavy small-cap Kosdaq dropped 1.24%; Australia's S&P 200 rose 1.39%.
Oil prices attempted to stabilize after a sharp selloff. Brent crude stabilized near $95 per barrel after plunging more than 8% in the previous session. Oil prices tumbled nearly 9% overnight, falling below $100 per barrel for the first time in two months. So far this week, oil has fallen about 20%, on track for its largest weekly decline since April 2020. Traders are betting that, faced with a Democratic-controlled Congress and political pressure from Middle East conflicts driving up energy prices, the Trump administration is less likely to further escalate war with Iran. The sharp drop in energy prices pushed bond markets higher, in turn weighing on US Treasury yields. Longer-dated US Treasuries extended their gains, while shorter-dated notes were little changed. The benchmark 10-year US Treasury yield fell 2 basis points to 4.87%.
In foreign exchange markets, the dollar weakened broadly as investors shifted focus to the Bank of England's monetary policy decision due later on Thursday. The market expects the Bank of England to raise rates to counter inflationary pressures from surging energy costs. However, the Bank of England may also push back to some degree against investor expectations for multiple rate hikes next year, seeking to temper market expectations for further monetary tightening.
Gold broke above $4,100. With the dollar and oil prices under pressure, gold prices broke through $4,100, gaining 5% over the past two trading days 鈥?the largest two-day gain since early April. Lower bond yields typically benefit gold, since gold itself generates no interest; at the same time, a weaker dollar makes gold cheaper for buyers holding other currencies. Rotberg said: "If the growth of AI capital expenditures is truly threatened, then the stock market's performance for the remainder of the year will face challenges." At the same time, "further broad weakness in the dollar is likely to benefit gold and other physical assets."
Wall Street debated whether AI stocks are already oversold, with Goldman Sachs saying a Democratic victory could actually spur capital expenditures. Regarding the sharp decline in AI-related stocks, institutional views diverged. Goldman Sachs believes AI stocks have recently been "sold off exhaustively," with valuations clearly retreating; as election uncertainty fades and positioning structure improves, tech giants may actually be prompted to accelerate data center investment earlier to avoid future regulatory changes. JPMorgan, meanwhile, cautioned that concerns about AI financing and commercialization could limit any short-term rebound. At the market level, with the elections concluded, the high volatility reflected by the VIX may be difficult to sustain; if volatility falls rapidly, major indices with AI weighting accounting for nearly half could benefit.
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