US markets crash after midterm wins and data center moratorium fears
US markets suffered a historic correction with $2.8 trillion in value lost, driven by fears of data center moratoriums in newly Democratic-led states. The Nasdaq fell 6% in a single day as investors reassess AI infrastructure costs.
Following Democratic midterm victories, US markets experienced a historic correction. The Nasdaq lost 6% in a single day, while the S&P 500 fell 2.7%, marking its fourth consecutive weekly loss. A total of $2.8 trillion in market value was destroyed, a nominal record. The sell-off was triggered by tweets suggesting data center moratoriums in newly Democratic-led states like Texas and Ohio, raising fears of higher compute costs and delayed AI adoption. Elon Musk lost $115 billion in two days.
In Europe, the DAX finished the week up 0.01%, with Heidelberg Materials, Bayer, and Fresenius gaining, while Rheinmetall fell 22% and Infineon dropped 10%. Sector rotation favored consumer staples, real estate, and financials over tech. Individual stock volatility was extreme, with Apploven up 71%, Airbnb up 16%, and Lumentum down 35%. Investors are now watching Nvidia's earnings on the 17th and Anthropic's potential IPO to gauge the sustainability of the AI capex cycle. The hosts argued that the market reaction is driven by uncertainty over AI infrastructure costs and political shifts, rather than a fundamental collapse of the AI thesis.