US stocks suffered a staggering $2.5 trillion wipeout just one day after a Democratic “blue tsunami” swept Republicans aside in the midterm elections.
Shares tied to the artificial intelligence boom plunged particularly sharply, with data-center suppliers and semiconductor manufacturers bearing the brunt of the selloff.
The Democratic victories triggered turmoil on Wall Street as the party’s control of the Senate raised concerns that officials could slow or suspend plans to build additional data centers across the country.
That prospect threatens demand for AI chips and other advanced technology products—industries that have become major engines of US economic growth.
Nvidia and Broadcom each fell more than 9 percent during the opening hours of trading, while Qualcomm plunged 14 percent as investors reassessed the sector’s outlook.
The iShares Semiconductor exchange-traded fund, SOXX, dropped 11 percent—its steepest intraday decline since the onset of the Covid-19 pandemic in March 2020.
The tech-focused Nasdaq Composite slid almost 5 percent, pushing the index firmly into correction territory after four weeks of gradual declines. By midday, the benchmark S&P 500 had fallen 3.6 percent.
Taken together, the retreat left Wall Street investors and the retirement accounts of ordinary Americans facing roughly $2.5 trillion in paper losses.
The tech-focused Nasdaq Composite slid almost 5 percent, pushing the index firmly into correction territory after four weeks of gradual declines. By midday, the benchmark S&P 500 had fallen 3.6 percent
A wave of local election results highlighted growing resistance to data centers, with voters nationwide strongly supporting measures to limit their construction. Pictured, an AI protest in New York
The declines were widespread, with every sector of the S&P 500 trading lower.
The Dow Jones Industrial Average was down 1,433 points, or 2.7 percent, at 12.26pm.
eToro analyst Jakub Rochlitz said the clearest catalyst for the selloff was investors’ reaction to the midterm election results.
‘But the first domino to fall was Anthropic’s and OpenAI’s growth numbers, which failed to impress investors at the beginning of October,’ Rochlitz told Our News Outlet.
‘That made the market more sensitive to negative news, and more of it has accumulated in recent days.’
‘The midterm election result didn’t really create a new fear. It was simply the gust of wind that knocked over a house of cards that was already becoming unstable,’ former Goldman Sachs analyst Nic Puckrin told Our News Outlet.
The selloff has also been intensified by the unusually high levels of leverage, or borrowed money, used by investors.
Several measures suggest markets are showing the kind of speculative behavior last seen during the dot-com bubble. Margin debt—money borrowed to fund investments—reached a record $1.5 trillion in June, roughly 50 percent higher than a year earlier.
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Federal Reserve data shows that US households now hold a record 48 percent of their financial assets in stocks. At the height of the dot-com bubble, the figure stood at 38.7 percent.
‘What the markets were missing was a spark to begin the selloff. It appears the combination of the election result and disappointing technology earnings was enough to push markets over the edge,’ Rochlitz told us.
Elon Musk was among the day’s most prominent losers after spending nearly half a billion dollars backing Republican candidates in the 2026 midterm elections.
Shares in his electric vehicle company, Tesla, dropped almost 12 percent. Including the sharp losses following the election, Tesla stock has fallen nearly 15 percent in two days, reducing Musk’s fortune by about $39.4 billion.
SpaceX has declined more than 12 percent since the election, translating into a staggering $113 billion paper loss for Musk. Combined, his losses since the vote have reached approximately $152 billion.
Elon Musk was among the day’s most prominent losers after spending nearly half a billion dollars backing Republican candidates in the 2026 midterm elections
Democratic leaders have said they intend to pursue tougher AI rules as they prepare to take control of Congress in January 2027.
Their proposed agenda includes mandatory safety testing, federal supervision of advanced AI systems, limits on data-center expansion and measures aimed at protecting consumers from higher electricity bills.
‘It will take months for markets to determine the Democrats’ practical influence on the AI buildout, and the effects on data-center construction will take even longer to emerge,’ Puckrin told us.
Investors will next focus on guidance from hyperscalers about future capital spending, along with any decision to move planned infrastructure projects from the US to Asia or the Middle East.
Nic Puckrin, markets expert and former Goldman Sachs analyst
At the local level, a major wave of anti-AI ballot measures underscored widespread opposition to data centers, as voters across the country backed proposals to restrict or block new projects.
The measures included outright bans, temporary construction moratoriums, limits on energy use and requirements for residents to approve projects before construction can begin.
The market rout marked a dramatic reversal from Wednesday morning, when stocks surged after Democrats won control of both chambers of Congress and gained the power to block President Trump’s legislation.
After results from across the country were released, the Dow Jones Industrial Average climbed 1,100 points, or 2.3 percent, as the Republican Party suffered major political losses. European indexes also rose about 2.0 percent in afternoon trading.
Amazon.com was among the biggest gainers, rising 7.1 percent. Meta Platforms added 1.6 percent, while Alphabet advanced 3.4 percent.
Trump celebrated the rally on Truth Social, claiming credit for the market’s gains: ‘Stock Market just hit another Record High — 91 Days in just a short period of time — Less than two years. Your 401(k)s are through the roof. Record Setting All!’
