S&P 500 futures slipped as Democrats were projected to win both chambers of Congress in the midterms. Traders fear tighter limits on data centers, and Asian chip stocks fell sharply.
Futures tied to the S&P 500 traded 0.34% lower as traders speculated that Democrats were headed for majority control of Congress. Nasdaq-100 futures shed 0.46%, and futures were off their worst levels of the session.
The Associated Press projected a Democratic win in both chambers. It also projected that Democrat Gina Hinojosa beat Republican incumbent Greg Abbott in the Texas governor race. Hinojosa has pledged a moratorium on data centers in the state.
Data center fears hit AI-linked stocks
Some on Wall Street say a big Democratic win would pressure the market, especially stocks tied to the artificial intelligence buildout. Investors fear more data center restrictions nationwide, and AI-linked stocks had already pulled back in recent weeks.
Texas matters because it represents about 27% of U.S. data center gigawatts, according to Wells Fargo estimates. According to Scott Ladner of Horizon Investments, the AI trade "does hinge on does Abbott win or not" for at least the next couple of days.
In overnight Robinhood trading, SpaceX was down 4.6% and Tesla 4.1%. CoreWeave fell 3.2%, while Alphabet was some 0.6% lower.
Asia sells off, yields slide
Asian semiconductor stocks tumbled on Wednesday. Disco fell 10.19% and Tokyo Electron lost 7.04%, while SK Hynix dropped 5.08%.
Japan's Nikkei 225 declined 4.45% to its lowest since May, leading losses across Asia-Pacific markets.
Treasury yields moved the other way as investors sought shelter. The 10-year yield dropped nearly 5 basis points to 4.902%, and the 2-year yield pulled back 6 basis points to 4.55%.
Volatility gauge climbs above 20
Futures tied to the VIX were last seen trading at 20.90. CNBC noted that a move above 20 tends to be a key level signaling heightened angst among investors.
Not everyone sees only risk. Angelo Kourkafas of Edward Jones said election-driven volatility may present an opportunity for long-term investors.
Source: CNBC
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