The overwhelming victory by the Democrats in the midterm elections shook up Wall Street this week, sending shares of companies tied to artificial intelligence and defense sharply lower while lifting hospitals, liquor makers and other businesses hoping for a change in Washington policy.
The biggest tremors were felt in shares of companies tied to the boom in artificial intelligence, on concerns that a Democratic Congress will put the brakes on further development of data centers. The frantic construction of data centers to power the AI boom has meant big profits for chip makers, power providers, cooling system producers and cloud computing companies, but Nvidia, Lam Research and others tied to the boom swung wildly this week on worries that Democratic victories in statehouses across the country could mean a slowdown in further construction, particularly in Texas.
Defense and oil companies fell on expectations that Democrats would push for an end to the U.S.-Iran war, which would likely lower energy prices. Northrop Grumman, Lockheed Martin, RTX and General Dynamics fell between 4 percent and 12 percent after Tuesday.
Meanwhile, hospital shares rose on the possibility that funding for several government programs could be restored or boosted, while liquor companies and others buffeted by tariffs rose on hopes for relief. Beer, wine and liquor companies could see relief from tariffs that have hurt sales both in the United States and globally, with Democrats taking control of Congress. Constellation Brands, which has U.S. import rights for Corona and Modelo beers, and Brown-Forman, which makes Jack Daniel's and other liquors, both had gains.
Elon Musk spent more than $445 million in an attempt to help Republicans maintain control of Congress. SpaceX, which houses Musk's xAI business, and Tesla, with plans for a fleet of mostly autonomous vehicles, fell 5 percent and 10.1 percent, respectively, after the midterms.
After the election, Costco Wholesale added 3.4 percent, Procter & Gamble rose 2.1 percent and Dollar General rose 2.5 percent.
