Democrat win roils global stocks, tech-heavy Nasdaq set to enter correction territory

Chip and data centre-related stocks suffered further losses on Thursday (Nov 5) as Nasdaq futures declined following the Democrats' election win, while the S&P 500 only marginally extended gains from the previous day after the Democratic party's sweeping midterm victory. Qualcomm experienced a 9.6% drop in pre-market trading after reporting fourth-quarter smartphone chip sales that fell short of Wall Street's expectations due to sluggish demand and reduced Apple-related revenue.

Other semiconductor stocks continued to decline after Wednesday's drop, with Nvidia down 0.8%, Marvell Technology off 3.4%, and Intel slipping 2%. The broader slide in chip stocks and AI infrastructure companies was exacerbated by growing public opposition to rapid industry expansion in key data center states. UBS strategists warned that data center pauses could slow buildout into 2028, with roughly 30% of projected 2028 additions now at risk due to opposition.

Data center operators IREN, Hut 8, and Applied Digital fell between 1.1 and 2.7%, while Neoclouds CoreWeave and Nebius Group saw declines of 3% each. Utilities and equipment suppliers tied to the data center boom, such as GE Vernova and Constellation Energy, also traded lower. AI server maker Dell experienced a 2.9% decrease. However, most large-cap tech stocks capitalized on the previous session's gains, bolstered by the belief that a slower AI build-out would benefit them.

Companies like Amazon, Meta Platforms, and Alphabet surged more than 1%, while Elon Musk's SpaceX and Tesla both slipped over 1% apiece, extending their losses. Elon Musk, who had invested nearly half a billion dollars in Republican candidates to maintain control in Texas, saw SpaceX and Tesla suffer due to his political activities.

At 7:04 am ET, Dow E-minis were up 330 points, or 0.62%, and S&P 500 E-minis were up 15.5 points, or 0.2%. Nasdaq 100 E-minis were down 145.5 points, or 0.51%. The S&P 500 reached its largest one-day percentage gain in three months on Wednesday, as easing political uncertainty lifted risk appetite. A recent decline in oil prices and a slowdown in AI growth contributed to the positive sentiment.

Brent crude futures rose over 1% on Thursday after falling more than 8% on Wednesday. Oil prices have fluctuated greatly this year due to concerns about supply disruptions from the Middle East conflict and heightened inflation concerns. Fed officials, including Richmond Fed president Thomas Barkin, are scheduled to speak throughout the day, followed by the crucial October jobs report due on Friday.

Other notable stock movements included Fair Isaac dropping 8.5% after missing fourth-quarter profit estimates and Snap falling 9% after missing third-quarter revenue estimates. AppLovin, on the other hand, jumped 20% after exceeding third-quarter profit expectations.