Nasdaq Plunges Into Correction as Democrats Prepare Crackdown on Data Centers

The Nasdaq dropped 5.5% Thursday morning led by a rout in technology stocks, as a Democratic wave in the midterm elections portends tougher rules for data center development.

The Nasdaq Composite erased its post-election day gains and then some, falling 1,420 points Thursday, led by sharp drops in tech stocks. The S&P Technology Select Sector Index fell about 6%, shedding over 200 points. The Dow Jones Industrial Average dropped 1,800 points, or 3.4%.

Chipmaker Nvidia Corp. and other tech staples like Oracle Corp. saw shares drop 8% or more as the session progressed. More diversified technology names like Intel Corp. and Meta dropped around 5% in late morning trading.

Democrats rode anxiety over artificial intelligence and data center development to flip dozens of seats in the House and Senate, gaining control of both chambers on Tuesday. Dozens of towns and cities also approved restrictions on data center development, adding to a growing list around the country of areas restricting data centers.

Democratic control of Congress is likely to mean a stronger crackdown on data center development, as opposed to the more laissez-faire approach of President Donald Trump who has promoted both super intelligence and data center development in the country.

The public has become only more wary as time has gone on. A poll by the Washington Post, ABC News, and Ipsos found 72% of Americans oppose data center construction in their communities. Two in three don't want them built anywhere in the nation at all.

Recent Realtor.com® research on data centers found they're increasingly moving into rural areas. While they do affect property taxes, how they affect the average homeowner's tax burden is complicated. And while the study found no impact on property values, that data tracks only large facilities in the two years after they open.

Data center bans succeed as Democrats eye clampdown

Data centers appeared on the ballot in 41 communities across 12 states this week, and in nearly every case, voters resoundingly voted to restrict or ban them, a sign that backlash continues to grow against the infrastructure needed to power artificial intelligence. 

Of the 41 ballot initiatives, only Harwood, ND, passed a pro-data center ordinance. Voters there rejected a ballot initiative that would have required the city to create an independent review paid for by the developer to evaluate the impact of data centers in the community. 

In Ohio, which has seemingly become an epicenter of the data center debate, 18 counties put data centers on the ballot. Many measures did not outright ban data centers, but set limits on noise pollution, water and energy use, and other environmental concerns. 

A number of people on the left quickly began discussing broader data center and A.I. regulation. That includes both scrutiny of data centers and tech companies. Democrats sunk one Republican bill on energy costs because it didn't do enough.

"Top of the Democratic agenda on day 1 needs to be a pause on advanced AI development, regulation of this out of control industry, and a ban on artificial superintelligence," Rep. Yassamin Ansari (D-AZ) posted to X on Wednesday.

In a video message Thursday, Sen. Bernie Sanders, (I-VT), said the votes Tuesday prove Americans want to slow data center development. This year, 20 Democrats signed on to a bill that would create a total moratorium on data center development.

"Democrats must enact a national moratorium on AI data centers, must pause advanced AI development, and ban super-intelligence," Sanders said.