US midterm election day: Dow falls 197 points; AI stocks rally, semiconductors surge 2.6%

US stock markets showed mixed performance on November 3 as investors awaited midterm election results. The Dow Jones Industrial Average closed down 197.26 points (0.38%) at 51,786.72, while the Nasdaq Composite gained 207.65 points (0.83%) to 25,372.01. The S&P 500 rose 27.52 points (0.36%) to 7,568.92.

Cautious sentiment ahead of the midterm vote drove selling in both economically sensitive and defensive stocks. However, artificial intelligence-related shares that had fallen in recent sessions attracted aggressive buying, reversing losses. This rotation redirected capital away from safe-haven sectors including housing and consumer staples. The Philadelphia Semiconductor Index surged 2.63% to 10,600.40, led by broad gains in memory and storage stocks including Micron (up 2.58%), Western Digital (up 2.59%), and SanDisk (up 4.78%). AMD jumped 3.65% during regular trading and surged over 9% in after-hours trading following stronger-than-expected third-quarter earnings and upbeat fourth-quarter guidance.

Key technology stocks showed divergent moves. Apple declined 1.9% after fourth-quarter guidance disappointed despite beating prior-quarter expectations. Nvidia, Microsoft, Amazon, Meta, and Alphabet posted gains of 2.27%, 2.74%, 2.06%, 2.36%, and 0.37% respectively, supporting the Nasdaq's advance. Broadcom rose 3.07% and ON Semiconductor climbed 3.6%, with the latter reporting AI data center sales jumped 175% year-over-year.

Election outcomes will determine which party controls the House and Senate beginning January 2025. Analysts noted the results could shape policy direction on artificial intelligence, data center regulation, national defense, and healthcare. JPMorgan strategists warned that a Democratic sweep of both chambers could pressure equities, particularly AI stocks, amid concerns over regulatory tightening. US long-term interest rates rose, adding relative pressure to stock valuations. Job openings increased 333,000 to 7.523 million in September, exceeding forecasts and weighing on bond prices.

Market commentators noted that while AI-related stocks had become oversold after recent declines, broader investor concerns about the sustainability of massive capital expenditures, financing costs, and returns on AI infrastructure investment remained unresolved.