- Dow Jones rose 0.5% to 33,121 points after Democrats' midterm win boosted optimism
- S&P 500 fell 1.4% to 7,583.91 as investors showed caution in market sentiment
- Nasdaq dropped 2.77% to 25,026.12, led by declines in AI-linked technology stocks
US stocks remained tumbled after the opening bell on Thursday, November 5, with both Dow Jones, Nasdaq trading lower after its massive rally following Democrats' victory in the midterm polls, while investors remained cautious over technology stocks.
Dow Jones Industrial Average declined 1.14%, to 52,737.2 points, S&P 500 fell 3.09%, to 7,451.32, while the Nasdaq Composite slipped 4.8% to 24,484.
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Nasdaq tumbled as artificial intelligence-linked stocks tanked for the second consecutive day as investors remained concerned over Democratic majority for both chambers of Congress could bring more regulation on AI. Chip companies such as Sandisk, SK Hynix, Broadcom and Nvidia dropped up to 9%, while Oracle fell nearly 1%.
Despite the dip, AI trade is still alive, but investors have a shifted to some of the more value and dividend-paying areas of the market, Bob Edwards from Edwards Asset Management told Bloomberg.
“The AI trade is here to stay, but it remains volatile, and investors should not overlook some of the more boring areas of the market,” he was quoted as saying. “We are not concerned about what the blue wave means for the buildout of AI, since the president still has the veto pen and data centers bring jobs and tax revenue.”
“Stay invested in diversified equities,” Ulrike Hoffmann-Burchardi at UBS Global Wealth Management told the publication, “Strong earnings, resilient economic growth, and robust demand for AI infrastructure continue to support our constructive view.”
It must noted that the demand for data centers in AI infrastructure is such that companies have struggled to keep up with it, the report said citing Kent Fung at Fundstrat Global Advisors.
“Remember when nervous investors worried about Nvidia's inability, for various reasons, to sell advanced chips to Chinese customers? It turned out that demand had so far outstripped Nvidia's production capacity that it didn't matter anyway,” he said.
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