After a huge stock market rally on Wednesday following the decisive Democratic win in the U.S. midterms, stocks tumbled sharply on Thursday as investors feared a slowdown in data center construction and the AI industry as a whole.
The Dow Jones Industrial Average dropped 1,600 points on Thursday, about 3 percent of its value, according to CNBC. The S&P 500, a stock market index of large companies, and the tech-centered Nasdaq index, also dived on Thursday, with the latter dropping approximately 5 percent, the New York Times reported.
The massive drops in the stock market indexes even stoked fears of a Wall Street trading freeze. The S&P 500 drop reached 3.8 percent at one point on Thursday; at 7 percent, a market-mandated “circuit breaker” kicks in and forces a pause on all trading for 15 minutes.
The circuit breakers are intended to halt severe market crashes. A 13 percent drop in the S&P 500 leads to another forced freeze on trading, while a 20 percent crash ends trading for the day.
Chipmakers like Nvidia and Qualcomm took a big hit on Wall Street, as investors anticipated more regulation of the AI industry from Democratic legislators taking power in January.
An X post from Bernie Sanders may have contributed to the investor fears, with the Democratic senator calling for a national data center moratorium (in all caps) late on Wednesday.
Shares of Tesla and SpaceX, both run by Republican mega-donor Elon Musk, dropped on Thursday for the second day, with potential regulatory pressure — and investigations — on the horizon.
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