What’s News in Markets: AI Blues, Musk Under the Microscope, Housing Hope

Hey, listeners. It's Saturday, November 7th. I'm Imani Moise for The Wall Street Journal. And this is What's News in Markets, our look at the biggest stock moves of the week and the news that drove them. Let's dive in. The blue wave in Washington turned into a sea of red on Wall Street as investors sorted out what the historic midterm elections meant for their portfolios. At first, they were optimistic. The Dow soared more than 1,500 points on Wednesday, its biggest one-day gain in more than a year. Investors were betting that a divided government could put some checks on President Trump's economic agenda. But by Thursday, that optimism had evaporated. Stocks suffered their worst sell-off since last year's tariff turmoil. Investors worried that the election results could threaten the AI boom that's powered much of the stock market's scale. The Nasdaq plunged into correction territory, wiping out roughly $2.5 trillion in market value in a single day. The tech-heavy index recovered some of those losses on Friday. Overall, the Nasdaq tumbled 3.4 percent, while the S&P 500 declined 2.7 percent, and the Dow slipped 0.9 percent. Oil prices also tumbled, as investors hoped Democrats would pressure the administration to end the war with Iran. Brunch crude futures fell more than 13 percent to end below $99 a barrel. One of the biggest casualties of the election was the AI trade. In many ways, the midterms were a referendum on the AI build-out. Voters across the country backed candidates and ballot measures that would slow the construction of new data centers. Like in Texas, where the incoming Democratic governor wants to pause new construction until lawmakers establish new regulations. Or Ohio, where more than a dozen towns voted to restrict or ban new data centers. That could put billions of dollars in planned AI investment at risk, lessening demand for chips and equipment that go inside those facilities. The Philadelphia Semiconductor Index lost more than 12 percent this week, with nearly all those losses coming on Thursday, its second-worst day on record. NVIDIA fell nearly 9 percent, rival AMD declined 11 percent, and Micron sank 22 percent. The mood around AI has shifted so dramatically that some investors are rethinking one of the biggest IPOs of the year. In a Wall Street Journal exclusive, we report that major backers of Anthropix's planned IPO are questioning its $1.5 trillion valuation. Some say the price tag may need to come down by hundreds of billions of dollars. So, let's get started. Let's get started. Let's get started. Let's get started. The midterm results were also a setback for one CEO in particular, Elon Musk. Shares of Tesla declined 10.4 percent this week, while SpaceX stock inched 0.3 percent lower. Even before the blue wave hit, Democrats signaled that they planned to use their expansive authority in Congress to investigate Musk's role in the Trump administration, and how he may have limited Ukraine's use of SpaceX's satellites in its war with Russia. The world's richest man spent more than $440 million backing Republicans, and more than $150 million on one race in Texas, where his preferred Senate candidate lost. And the election results could also complicate Musk's future business plans. Analysts say a potential merger between Tesla and SpaceX could face more scrutiny under a Democratic Congress. But not all of Musk's business troubles are political. Tesla announced yesterday that it's winding down production of its Cybertruck next year. The futuristic stainless steel truck was years in the making, but has struggled to win over buyers. According to data from Motor Intelligence, fewer than 2,000 Cybertrucks were registered in the U.S. in October. And the blue wave gave a boost to at least one corner of the market. Homebuilder stocks rallied after the election. On Wednesday, shares of D.R. Horton rose by 8.1 percent, while Pulte Group gained 7.2 percent, and Lennar added 7.1 percent. The industry has struggled with high mortgage rates that have priced out buyers and forced builders to slash production. But investors see reason for optimism. Restrictions on AI data centers could ease inflationary pressures, helping to bring down mortgage rates. So could an end to the war in Iran, which has driven up fuel prices and borrowing costs more broadly. Other policy changes could give homebuilders a boost too, like easing immigration restrictions, which have contributed to labor shortages in the construction industry. But analysts say a rebound in the market is not the answer. It's not the answer to the question. It's the answer to the question. Builders are still struggling with weak demand and rising costs, and the industry is heading into what's typically its slowest season. And now you know what's news in markets this week. You can read about more stocks that moved on the week's news and our live markets coverage on WSJ.com. Today's show was produced by Anthony Bansi with supervising producer Melanie Roy. I'm Imani Moise. Have a great weekend and see you next Saturday. Have a great weekend.