Nasdaq heads for worst day in 18 months as AI regulation fears hit Wall Street

The Nasdaq composite index is heading for its worst day in 18 months, slumping up to 5% on Thursday, as investors anticipate tougher regulation of the artificial intelligence industry following Democratic gains in this week's midterm elections. The index has fallen into correction territory, more than 10% below its recent record high. Chip stocks led the decline, with SanDisk dropping 19% and Western Digital falling 16.5%, while the VIX volatility index jumped 40%. Analysts cite expectations that Democratic governors will clamp down on datacentre expansion, and voters rejected datacentres in several local ballots. The Dow Jones fell over 1,000 points, with Nvidia down 6.7%. The sell-off reverses Wednesday's rally, when stocks gained on hopes Democratic success could restrain the White House. European markets also weakened, with the FTSE 100 closing down 0.4%. Analysts warn the results signal a slowdown in datacentre buildout pace over the next two years.