US stock markets suffered a staggering $2.5 trillion loss in paper wealth, just one day after a Democratic “blue tsunami” swept Republicans out of power in the midterm elections.
Artificial intelligence stocks were among the hardest hit. Companies that supply data centers, advanced chips and other AI infrastructure saw their shares plunge sharply.
The sweeping Democratic victories sparked a Wall Street selloff on Thursday. Their expected control of the Senate has raised concerns that government agencies could slow or halt plans to build additional data centers across the United States.
That could reduce demand for AI semiconductors and other high-performance technology products—industries that have become major drivers of US economic growth.
The S&P 500 fell 3.5 percent after the opening bell, with losses deepening throughout the morning. The index was heading toward its steepest decline since President Donald Trump unsettled global markets in April 2025 with his “Liberation Day” tariffs.
Shares of chipmakers Nvidia and Broadcom dropped more than 9 percent during the first hours of trading, while Qualcomm fell as much as 14 percent.
The iShares Semiconductor exchange-traded fund, known by its ticker SOXX, slid 11 percent. That represented its largest intraday decline since the beginning of the coronavirus pandemic in March 2020.
The technology-focused Nasdaq Composite dropped almost 5 percent, pushing the index firmly into correction territory after four weeks of steady declines.
Taken together, the selloff left Wall Street investors and the retirement accounts of millions of Americans facing an estimated $2.5 trillion in paper losses.
The tech-heavy Nasdaq Composite fell nearly 5 percent, putting it firmly in correction territory after the gradual declines seen over the last four weeks. The benchmark S&P 500 was down 3.6 percent as of midday
Trump speaks in public for the first time since the sweeping GOP loss in the midterms on Wednesday in DC
The decline was widespread, with every sector of the S&P 500 trading lower.
By 12.26pm, the Dow Jones Industrial Average had fallen 1,433 points, or 2.7 percent.
Jakub Rochlitz, an analyst at eToro, said the most immediate explanation for the selloff was that investors were adjusting their positions to reflect 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 the Daily Mail.
‘That made the market more sensitive to negative news, which has piled up in recent days.’
‘The midterm election result didn’t really create a new fear, it was just the gust of wind that pushed over the house of cards that was already getting shaky,’ former Goldman Sachs analyst Nic Puckrin told the Daily Mail.
Over the long term, share prices generally track corporate earnings and interest rates more closely than the balance of power in Washington.
The selloff was also intensified by the exceptionally high level of leverage—borrowed money—being used by investors.
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Several measures suggest that markets have reached speculative levels not seen since the dot-com bubble. Margin debt, the money borrowed to fund investments, reached a record $1.5 trillion in June—around 50 percent higher than a year earlier.
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, that figure stood at 38.7 percent.
A wave of local election results has exposed the scale of growing opposition to data centers, with voters across the country overwhelmingly backing measures to restrict their construction. Pictured, an AI protest in New York
‘What the markets were missing was a spark to start the selloff. It seems that the mix of the election result and some disappointing tech earnings results was enough to tip markets over the edge,’ Rochlitz told us.
Elon Musk was another major casualty. He spent nearly half a billion dollars supporting Republican candidates across the country during the 2026 midterm elections.
Shares in his electric vehicle company, Tesla, fell almost 12 percent on Thursday. Including the sharp post-election losses recorded the previous day, Tesla stock had dropped nearly 15 percent over two sessions, reducing Musk’s fortune by about $39.4 billion.
SpaceX, meanwhile, has declined more than 12 percent since the election, wiping approximately $113 billion from Musk’s wealth. Combined, the losses have left him facing about $152 billion in paper losses since the vote.
Democratic leaders have said they intend to pursue tougher AI regulation after taking control of Congress in January 2027.
Their agenda is expected to include mandatory safety testing, federal supervision of advanced AI models, limits on data-center expansion and safeguards against higher electricity bills.
‘It will take months for the market to figure out what impact the Democrats will really have on the AI buildout, and the impact on data center construction will take even longer to actually materialize,’ Puckrin told us.
Investors will next be watching guidance from hyperscalers on capital spending, along with any indication that major technology companies may move more infrastructure projects from the US to Asia or the Middle East.
A notable loser today is Elon Musk, who spent nearly half a billion dollars on the 2026 midterms supporting Republican candidates across the country
Nic Puckrin, markets expert and former Goldman Sachs analyst
At the local level, a powerful wave of anti-AI ballot measures highlighted growing resistance to data centers. Voters across the country overwhelmingly supported proposals designed to restrict or block new facilities.
The measures included outright construction bans, temporary moratoriums, limits on energy use and requirements for residents to approve projects before construction could begin.
Thursday’s stock market massacre was a dramatic reversal from the gains recorded on Wednesday morning, when Democrats took control of both chambers and secured the ability to block President Trump’s legislation.
After results began coming in from across the country, the Dow Jones Industrial Average climbed 1,100 points, or 2.3 percent, as Republicans absorbed a major political defeat. European indexes also rose by about 2.0 percent during the afternoon.
Amazon.com was among the biggest beneficiaries, gaining 7.1 percent. Meta Platforms rose 1.6 percent, while Alphabet added 3.4 percent.
Trump celebrated the rally on Truth Social and claimed credit for the market’s surge: ‘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!’