Why are the markets so wild today?
I’d like to sum up what’s happening today, but there’s an enormous amount putting pressure on stock prices. So many things are weighing on the market at once that different sectors are moving in completely opposite directions.
The main trigger is the Democrats, who have taken control of both chambers of Congress as well as the governorship of Texas. The market clearly sees this as a threat to AI.
🔻 Data centers under pressure. The Democrats are associated with a pause in data center construction and stricter regulation. Texas accounts for roughly a quarter of planned capacity in the US. That’s why stocks like IREN $IREN and CoreWeave $CRWV are falling.
🔻 The energy sector is falling along with them. Vistra $VST and Constellation $CEG have risen thanks to data centers, which need huge amounts of electricity. Fewer data centers mean less demand for their electricity.
🔺 On the other hand, clean energy and healthcare are rising, oil prices have fallen, and the S&P 500 is still in the green.
A divided government will have less room for big spending, and cheaper oil is holding inflation back. Both could push bond yields lower, which are the biggest headwind for stocks today.
Are you buying anything in this crazy market today?