Nasdaq falls 5.5% as Democratic midterm sweep stokes AI rules fear
Chip stocks led a sell-off that spread to Tokyo and Seoul after projections put both chambers of Congress in Democratic hands.
The Nasdaq composite fell 5.5% to a six-month low and semiconductor shares led a sell-off that spread into Asia, after projections that the Democratic Party had won control of both chambers of Congress raised the prospect of tighter rules on artificial intelligence and data centres.
The tech-heavy index fell as much as 5.7% during the session, according to Nikkei Asia's live coverage. The Dow Jones Industrial Average dropped more than 1,800 points, or 3%, and the S&P 500 lost 4%. Nikkei Asia reported that all three benchmarks recorded their largest single-day declines since April 2025.
The Philadelphia Semiconductor Index fell as much as 12%, its steepest drop since March 2020, with all 30 components lower. Nvidia fell as much as 9%, Micron 12%, Dell Technologies 12% and CoreWeave about 10%. Vertiv, GE Vernova and Corning, which supply data-centre equipment and power, also fell.
Asian markets followed. Japan's Nikkei Stock Average closed at 61,077, down 1,110 points, after opening higher, with memory maker Kioxia Holdings down about 9%. South Korea's KOSPI fell as much as 5%, led by a 9% fall in SK Hynix and 7% in Samsung Electronics. Taiwan's Taiex lost more than 2%.
The trigger was political. Nikkei Asia reported that The Associated Press had projected Democrats flipped Republican-held Senate seats in North Carolina, South Carolina, Ohio, Texas, Kansas and Iowa, clearing 51 seats in the 100-seat chamber, and later called the House for the party once it passed 218 seats. The AP needed eight days to call the House in 2022 and in 2024, Nikkei Asia noted.
Investors had first rallied. The Dow opened nearly 2% higher and later jumped more than 1,500 points after President Donald Trump signalled he would work with Democrats, Nikkei Asia reported. The reversal came as attention turned to regulation. Democratic wins in the races for governor in Texas and Georgia, both states with heavy data-centre construction, fed those concerns.
Trump acknowledged the result. "I don't view it as a hit on me," he told Fox News, according to Nikkei Asia, and on Truth Social posted an image of a red hat reading "VETO". Vice President JD Vance wrote on X that "the reason we lost is the war", referring to the conflict with Iran. Trump told reporters the war was worth fighting: "I would have done nothing different."
A Chinese Foreign Ministry spokesperson said the result was an internal US affair and that Beijing was willing to strengthen communication with Washington, Nikkei Asia reported.
How the reports differ
Nikkei Asia's live coverage tied the sell-off to fears that Democratic control of Congress would bring tighter regulation of AI and data centres, and opened with the election result before the market move. Reuters and CNA both headlined the day as the Nasdaq being "set to confirm correction as AI spending worries mount", putting the emphasis on spending rather than on regulation. Bloomberg led with the S&P 500's fall and called it the largest since April 2025, framing the session as driven by "AI fears". Nikkei Asia itself published two headlines as losses deepened, first reporting a 4% tumble and later a 5.5% plunge.
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