US stocks nosedive as Democrat victory sparks investor panic

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US stocks nosedive as Democrat victory sparks investor panic Chris Price Thu, 5 November 2026 at 4:32 pm GMT-5 11 min read MU -16.10% ^NDX -6.36% NVDA -8.77% AMD -16.32% Wall Street suffered its worst sell-off since Donald Trump's tariff rollout amid fears the Democrats will derail the AI boom. The Nasdaq 100 plunged more than 6pc on Thursday - the biggest fall since April 2025 - with shares in semiconductor makers the hardest hit. The downturn was the worst since Mr Trump's so-called "liberation day", when he rolled out tariffs to countries around the world. Investors fear the Democrats' midterm election victory will usher in tighter restrictions on AI companies, whose valuations have grown rapidly under Mr Trump. Nvidia, which is the world's most valuable listed company, fell by more than 6pc while rivals including AMD and Micron plummeted 13pc and 11pc, respectively. The companies make semiconductors that are used in data centres – huge buildings that power the models of AI companies. Several Democrats which have won control of former Republican states have backed moratoriums on data centres in their local areas, potentially signalling a slowdown in demand for chips. Elon Musk's empire also took a beating for a second day, with Tesla plunging 10pc and SpaceX falling 9pc. The decline on Wall Street was in stark contrast to European markets. The FTSE 100 was 0.5pc higher, while the Cac 40 in Paris gained 0.7pc as investors switched out from AI stocks into more traditional industries. Susannah Streeter, an analyst at Wealth Club, said: "A release valve has been unscrewed following the Democratic success of the midterms, with pent-up concerns about an escalation of the war in the Middle East evaporating. "But sentiment around the AI trade remains fragile, with an expected slowdown in the data centre build-out still acting like a drag on the big tech sector players." Thank you for following our coverage of the sell-off on Wall Street, with around $3.2tn lost in total value. The Nasdaq suffered its worst day in a year and a half as traders digested the Democrat's newly-elected control of Congress. So-called 'safe haven' investments were able to benefit from cross-asset trading, with two-year Treasury yields falling to a two month low. Keep up-to-date with the latest business news here. The closing bell has marked the end of a tough day for the technology sector, which has weighed on the major indexes. In total, US stocks shed around $3.2tn in value. The Nasdaq composite, which is especially tech heavy, closed 5.5pc lower as traders reduced exposure to the sector, ahead of an expected crackdown on AI development. Similarly, the S&P 500 suffered a 4.3pc loss for the day. The Philadelphia Semiconductor Index, which tracks the world's largest-cap chipmakers, was down 12.2pc - it's biggest fall since the Covid sell-off in 2020. US stocks have began to bounce back ahead of the closing bell at 9pm GMT, but are still heading for their biggest drop in 18 months. The Nasdaq 100 fell 5.3pc, weighed down by tech stocks stricken by investors' concerns of a slowdown in data centre build out. The index is still on track for its biggest single-day drop since Donald Trump's "liberation day" tariffs rocked markets back in April 2025. The tech-focused index had been down as much as 6.4pc earlier today, with the S&P 500 now down 4.2pc. A softening US dollar is helping to drive a sharp rebound in gold prices, pushing futures up 1.1pc to around $4,118 per troy ounce. With gold priced in US dollars, a weakening currency reduces the cost for international buyers, stimulating demand. The rebound in gold prices also follows a stock market fall which has made 'safe haven' assets more attractive, such as precious metals and government bonds. The dollar continues to weaken as traders predict deadlock in Congress, with the Democrats gaining control of the House and the Senate. Investors have began moving their cash into 'safe haven' assets, with US Treasuries benefitting from strong demand. The cross-asset move come in the wake of a tech sell-off that has wiped trillions off of Wall Street, with traders choosing instead to invest in US Government bonds. The yield on the 2-year Treasury note fell to 4.48pc for the session, as investors seek out lower risk options. Yields were sat at 4.58pc at the start of the session. It represents a silver lining in Thursday's sell-off for Scott Bessent, the US Treasury Secretary, with debt interest costs falling as the price of Treasury notes increase. Investors were spooked after disappointing results from chipmakers ARM and Qualcomm yesterday. Qualcomm is down 10pc, having plunged 14pc at the opening bell, after its current-quarter guidance came in weaker than expected. ARM, another large-cap in the sector, fell 12.5pc on Thursday after the company reported its royalty revenue rose just 8pc to $670m - well below forecast. These companies weighed on the Philadelphia Semiconductor Index, to drag the group of the 30 biggest chipmakers down 10.5pc. Bitcoin has lost around $4,394 (£3,260) today as investors jitter over potential tighter regulations on cryptocurrency. Democrats have historically been less supportive of crypto than Republicans, which has caused the industry to go on the defensive since Wednesday. Shares in exchange Coinbase, and stablecoin issuer Circle, fell as much as 11pc. Trading venue Gemini and crypto firm BitGo fell as much as 17pc. The 'fear index', also known as the VIX, has risen more than 47pc today, as investors fret over a sell-off across the technology sector. The index earlier hit its highest level in seven months, with traders frantically looking to reduce exposure to the sector as anti-data centre policymakers enter the House and the Senate. Greg Casar, a Texas Democratic congressman, said the election result was "a revolt against data centres.. and in a few years we will look back on it as just the early tremor of a much bigger AI earthquake upending American politics." The Nasdaq 100 index is set to lose around $1.8tn in market value. The tech-heavy Nasdaq is heading for its worst day in 18 months, after slumping by around 5pc on Thursday. The Nasdaq composite has now fallen into 'correction territory' - where the index falls more than 10pc below its recent record high. It's heading for its biggest single-day fall since Donald Trump's 'liberation day' in April 2025, where he announced a raft of new tariffs on global partners. Concerns over AI spending gripped the New York Stock Exchange as investors expect tougher regulation of data centre expansion plans. Chip stocks are on course for their second-biggest one-day drop this century, as Wall Street investors rush to reduce exposure. The Nasdaq 100 has fallen 5pc, and the S&P 500 is down 3.3pc. An exchange-traded fund tracking American semiconductors lost more than 12pc of its value on Thursday. Major chipmakers made heavy losses, with Qualcomm dropping 11.1pc, AMD falling 14.2pc, and Nvidia down around 7.3pc. The Philadelphia Semiconductor Index, which tracks the 30 biggest chipmakers, was down as much as 11.9pc on Thursday. The single-day drop, if maintained, would be the biggest since the Covid pandemic started in March 2020, the index's biggest single day fall since 2000. SpaceX and Tesla stocks extended declines on Thursday, each dropping around 9pc, as investors raise doubts over their potential merger. Shares of the Elon Musk-led companies fell after the Democrat's midterm wins raised concerns over regulatory hurdles for data centre build outs in the US. It comes after the billionaire owner of the companies said that he believes merging SpaceX with Tesla would be a good idea, and revealed that two were exploring a potential deal. Dan Ives, tech analyst at merchant bank Yorkville Ives, raised doubts over the futures of the merger - given the Democrat victories. He wrote: "We believe a SpaceX/Tesla merger happens, but now faces a much tougher regulatory roadmap to get this deal done in 2027, given this new political blue roadmap in DC/Texas." European stock markets have retreated from record high levels as the tech sell-off reverberates across the continent. The Stoxx Europe 600 fell 0.7pc, erasing earlier gains of as much as 0.8pc, after earlier surpassing its most recent August high. Technology shares were the main drag on the pan-European benchmark, with ASML Holding NV sliding 9pc as the Nasdaq 100 sank 6pc. A UBS Group AG basket of European semiconductor stocks fell 11pc, the lowest since April. In London, the FTSE 100 edged 0.3pc lower after being up more than 1pc earlier. The Bank of England raised interest rates for the first time in three years and signalled further rate rises are on the cards. Investors are fretting that the Democratic sweep of the House and the Senate could spell a slowdown in the AI rollout, sending chipmakers down. The Philidepphia Semiconductor Index – a closely watched grouping of chipmaking companies – has fallen 36pc since hitting a record high in June. Chipmakers help support the building of data centres, which has widely been opposed by the Democrats. Chris Murphy, of trading firm Susquehanna, said the drop was a result of worries about the midterm election result. He said: "The rotation out of chipmakers reflects growing concern about the pace and funding of AI spending due to the risk of more regulations after the blue wave, even as earnings remain resilient and valuations have reset sharply." He added: "We are not concerned about what the blue wave means for the buildout of AI, since the president still has the veto pen and data centres bring jobs and tax revenue." Nearly $390bn (£289bn) has been wiped off the value of Nvidia in early trading after it was swept up in a post-midterm election market rout. The world's largest company plunged 8.1pc on Thursday as nationwide victories for Democrats on Wednesday raised concerns that the AI boom faces more regulation and political opposition. The move dragged down the S&P 500 by more than 3pc, with the Nasdaq 100 down more than 6pc. A 1pc move for Nvidia, for example, has more effect on the S&P 500 than almost every other US stock because it is the second-largest by total value. Several chipmakers fell heavily, with AMD and Micron both down more than 16pc. Traders cut the odds on Anthropic launching its listing this year after the latest sell-off in the US tech sector. Polymarket, the predictions platform, said there was an 89pc chance of the AI company floating before the end of the year, down from 95pc before the latest downturn. Analysts suggested the Claude chatbot maker may have to cut the price of its listing, known as an initial public offering (IPO), if the company wants to attract investors. Wall Street stocks plunged in early trading as fears grew about a Democrat backlash against AI companies. The Nasdaq 100 declined 4.4pc in early trading, while the S&P 500 dropped 1.9pc after huge drops for chipmakers and data centre developers. Democrats are expected to slow down the development of data centres crucial to the rollout of AI. The party swept to victory in both the House of Representatives and the Senate this week, increasing the chances of political gridlock in Washington.

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