The Democratic victory in the midterm elections sent shockwaves through Wall Street, with significant impacts across various sectors. AI-related stocks, which had surged on the back of the data center construction boom, took a hit as investors feared Democratic-controlled Congresses might slow down further development, particularly in Texas. Companies like Nvidia and Lam Research saw wild swings, while hyperscalers such as Amazon fared better.
Defense and oil companies also felt the pressure. Defense stocks like Northrop Grumman, Lockheed Martin, RTX, and General Dynamics dropped between 4% and 12% on expectations that a Democratic Congress would push for an end to the U.S.-Iran war, potentially reducing demand for weapons. Oil companies, which had benefited from the war-driven supply constraints, also lost ground as the prospect of lower oil prices loomed.
Meanwhile, sectors like healthcare and renewable energy saw gains. Hospital shares rose on hopes of restored or boosted funding for programs like Medicaid and the Affordable Care Act. Renewable energy companies also stood to benefit from a more industry-friendly Congress. Conversely, data center power providers faced challenges as skeptics gained influence in Congress.
Other notable moves included a 33% drop in Trump Media & Technology's market value and gains in consumer staples and liquor companies on hopes of tariff relief. The housing sector also saw some positive movement, though mortgage rates remain a concern due to expected Federal Reserve rate hikes.