Yesterday’s market rally was the largest after a mid-term election since the 1980’s.  Today, in a polar opposite response, things are looking quite bleak.  In fact, today over 86% of the S&P 500 closed negative.  The S&P 500 was off 4.35%.  The NASDAQ closed down 5.52% today, with the NASDAQ 100 being off nearly 6.5%.  Semiconductors closed down 12.25% today alone, measured by the Philadelphia SOX index. This seems to be an overreaction. 

Whether Tuesday’s election results brought elation, despair, or emotions in between, we’ve long held that one should not allow their political ideology to influence their investment decisions and planning.  Politics and investing are a dangerous combination.  When merged, investors tend to view things overly optimistically or too pessimistically depending on their political views.  Nonetheless, this does not mean one should ignore policy, nor potential policy changes.  

It is a potential policy change that seems to have investors worried today.  There appears to be growing concern over the potential push back against data centers.  Data centers and their buildout are critical to artificial intelligence.  According to Ballotpedia, https://ballotpedia.org/Data_center-related_ballot_measures,_2026 there are 50 local ballot initiatives being held this year regarding data centers.  Of the 47 local measures already held, only one favoring development passed, while 46 limiting data centers passed.  Furthermore, in addition to the referendums, some of the newly elected state officials ran in opposition to further data center construction. 

This perceived opposition is significant since much of the recent market runup has been based on the prospects of artificial intelligence.  And, the outlook is not simply over the AI buildout phase with increased capital expenditures but perhaps more importantly the anticipated AI promise of eventual efficiencies, productivity, and ultimately higher corporate earnings.  The AI revolution is likely to change virtually all factors of life and business – much for the better, but some for the worse.  If there is a hindrance to the data center buildout, then one could envision a slowdown not only in AI, technology, and communications, but perhaps even in an earnings slowdown across various sectors in the S&P 500.  

We believe initial reservations over data centers will work their way out.  There is too much momentum for a complete halt, along with an impact on national security.  Also, not all 50 states are opposed to data centers. The US needs to continue at the forefront of the AI revolution.  Therefore, it is illogical to assume that data center buildout comes to a complete halt.  However, early indications suggest the buildout could be slowed.  

We believe we are still in the early innings of the AI revolution.  We were quoted earlier this week in the Wall Street Journal regarding this very issue.    https://www.joycewealthmanagement.com/news/jd-joyce-long-term-outlook-artificial-intelligence The pre-election focus however had more to do with the concern over the enormous capex spend by hyperscalers and other tech companies along with the possibility of an AI bubble.  Today, those concerns don’t seem as relevant as the fear of an AI halt or data center moratorium.  We remain bullish on AI and its eventual fulfillment.  We also believe there will likely be winners and losers along the way.  Today, Nvidia, the poster child of AI, was off over 9.25%.  NVDA is scheduled to report earnings on November 17.  That too will be a major indicator of the health and outlook of the AI trade.  The AI trade is not a slam-dunk.  However, we believe the general trend for AI remains strong, despite the recent pullback.  

We often think of investing as building a mosaic.  One takes multiple pieces of data to build a complete picture. Corporate earnings remain particularly strong.  Valuations are low relative to historical norms.  Today, Bloomberg reported that an entity is attempting to sell their $500 million portfolio of AI infrastructure and data center loans. Of course, in today’s AI spend, this number is not overly alarming but perhaps indicative of a knowledgeable party’s potential concern over the current outlook.  Tomorrow, October employment data is to be released.  Inflation is the problem.  Jobs are ok.  Fed needing to act.  Although pieces of data might currently look confusing and at times even out of place, we believe this pullback will be short lived as data becomes more available and as concerns subside longer-term.  As we put the pieces together, a positive outlook emerges.  And, we remain optimistic for the markets and for our country. 

As always, thank you for your interest, trust, and confidence you place in us.  We are here if you need anything.   

Not an offer or Advice: This commentary is provided for informational and educational purposes only and does not constitute a recommendation to buy or sell any specific security or to adopt any particular investment strategy. The views expressed represent the current opinions of Joyce Wealth Management as of 11/05/26 and are subject to change without notice.