Wall Street Soars After Democrats Win Congress as Data Center Stocks Tumble
Wall Street rallied on Wednesday, Nov. 4, after Democrats won control of both chambers of Congress in the midterm elections, but stocks tied to the artificial intelligence data center boom took a beating.
The Dow Jones Industrial Average jumped about 1,569 points, or 3%, to close at 53,356.12, its best day since April 2025. The S&P 500 rose 1.58% to 7,688.62, and the Nasdaq Composite gained 1.44% to 25,736.51, according to closing figures compiled by StockTitan.
Why Investors Cheered
Democrats took the House and flipped the Senate, including wins in places that have long voted Republican. Many investors read the outcome as removing a major source of uncertainty and setting up a divided government.
"Stocks are sharply higher today as election clarity reduces uncertainty," Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, told Reuters. "The election introduces a degree of gridlock to the economic backdrop," he added, a setup he said is often good for stocks.
Oil also played a big role. U.S. crude prices fell more than 8% to settle around $88 a barrel, as traders bet the shift in power in Washington could speed up an end to the Iran war, Reuters reported. Energy was one of only two S&P 500 sectors to finish lower.
Data Center Stocks Tumble
The day's biggest losers were companies that build, power and cool the massive data centers behind AI. Hut 8 fell about 23%, Sterling Infrastructure dropped about 21%, and Modine and Cipher Digital each lost roughly 20%. AI cloud company CoreWeave slid nearly 10%.
Democrats made gains in key data center states, including Texas and Georgia, where local pushback against rapid expansion has been growing. Investors worried that could mean more scrutiny and slower construction for the industry.
In Texas, Democrat Gina Hinojosa won the governor's race. In July, her campaign called on Gov. Greg Abbott to "sign an emergency executive order putting a moratorium on data centers until the legislature meets." Her campaign has not said whether such a pause would cover projects already under construction. Texas accounts for about 27% of U.S. data center power, according to a Wells Fargo estimate cited by CNBC.
"It's pretty clear that the AI trade will face some headwinds there," said Scott Chronert, head of U.S. equity strategy at Citi Research.
Some of the declines may also reflect company-specific news. Hut 8 released quarterly results the same morning, and both Hut 8 and Cipher had jumped sharply the day before. Communities across the country have also been pushing back on new data centers, a risk some companies already flag to investors.
Winners and Losers
Big Tech names moved the other way. Apple rose more than 5% and hit a record high during the session, while Amazon gained about 6%. Investors bet a slower buildout would ease spending pressure on cash-rich giants. Chipmaker Nvidia fell about 3%, and the Philadelphia semiconductor index hit a six-month low.
Defense stocks, including Northrop Grumman, RTX and Lockheed Martin, declined on concerns that President Donald Trump's $1.5 trillion defense budget request could face a tougher path in a Democratic Congress. Solar and clean energy stocks rose on bets that federal support for the industry will be preserved, with First Solar up more than 4%.
Health care stocks were mixed. Hospital operator HCA rose about 10%, and insurer Centene climbed nearly 13%, while CVS Health fell about 12.5%.
Tesla and SpaceX, both led by Elon Musk, were also among the laggards. Musk spent nearly half a billion dollars backing Republican candidates this cycle, including efforts in Texas, where Democrat James Talarico won a Senate seat.
Will the Rally Last?
Not every analyst expects the gains to stick. Some strategists cautioned that the rally could fade, while others noted that markets have historically favored divided government. Trading in data center stocks remained shaky the next morning, with CoreWeave, Nebius and IREN slipping again in premarket trading on Thursday.
Investors will also be watching whether Texas moves ahead with a data center pause once Hinojosa takes office, and how quickly Congress acts on spending and energy policy in the new year.
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