AI Selloff Extends, Treasurys Gain as Blue Wave Reverberates

By Joe StonorArtificial-intelligence stocks continued to weaken globally as investors digested the implications of the Democratic sweep in the U.S. midterm elections, even as oil prices held below $100 a barrel and Treasury yields dropped to recent lows.Futures for the Dow Jones Industrial Average rose 0.4%, pointing to further gains for the index following its postelection surge. The Dow notched its best day since April 2025 on Wednesday in what was its strongest post-midterms performance since 1982. Equities in Europe also rallied, with the continent's Stoxx 600 on track for its first record close since August.Nasdaq futures fell 0.7% as AI stocks weakened, while S&P 500 futures were flat. Strategists expect that Democrat wins in Congress and gubernatorial races--particularly in Texas--will slow the build-out in data centers. U.S. chip stocks fell premarket, while memory-chip makers Samsung Electronics and SK Hynix dropped 7.5% and 9.5%, respectively, in South Korea. The Kospi and Japan's Nikkei 225 both sold off. AI stocks fell across Europe.A data-center slowdown "should impact estimates for AI infrastructure stocks as well as cloud companies," UBS strategists said in a research note.Oil prices steadied after plummeting Wednesday, but held well below recent highs. Benchmark Brent crude oil contracts edged up 0.35% to hover around $95 a barrel after trading around $118 at the end of last week. Traders bet that Democrats' sweep of Congress and Republican finger-pointing will result in a change in U.S. policy in the Middle East.Lower energy prices eased inflation concerns, while the clarified political situation supported a return to risk. Investors are looking at two years of divided government and a gridlocked legislative process--a political setup Deutsche Bank strategists said would bring stability and limit U.S. fiscal excess.Treasury yields pulled back to eight-week lows. Ten-year yields dropped to trade around 4.870%, while 30-year yields traded below 5.250%. Two-year Treasurys traded slightly above a two-month low hit Wednesday.The dollar weakened and gold rallied back above $4,100 a troy ounce. Bitcoin topped $80,000.For the day ahead, the Bank of England will announce its latest policy decision, with a quarter-point hike nailed on by markets. ConocoPhillips and Sony Group are among the companies reporting earnings before the opening bell.Write to Joe Stonor at [email protected]