Stock market meltdown as $2.5trillion is wiped out in Wall Street bloodbath after Democrats’ midterms victory rally turns to financial carnage
The stock markets have taken a massive $2.5 trillion hit just one day after the Democrats’ blue tsunami drowned Republicans in the midterm elections.
Stocks related to the artificial intelligence trade have also plunged deep into the red – with tech companies supplying data centers and microchips being the hardest hit.
The nationwide Democratic victories triggered financial carnage for Wall Street on Thursday, as their control of the Senate raises the possibility that governments may pause construction of more data centers across America.
That would mean fewer purchases of AI chips and other super intelligence tech-related products, which are currently driving much of the US economy’s growth.
The S&P 500 fell 3.5 percent after opening, with a loss that accelerated through the morning. It´s on track for its worst drop since President Donald Trump shook markets worldwide in April 2025 after announcing his ‘Liberation Day’ tariffs.
As a result of the uncertainty, shares of chip manufacturers Nvidia and Broadcom both lost more than nine percent in the first hours of trading this morning – while Qualcomm bottomed out with a 14 percent drop.
The iShares Semiconductor exchange-traded fund SOXX dropped 11 percent, marking its biggest intraday loss since the start of the pandemic in March 2020.
The tech-heavy Nasdaq Composite fell nearly five percent, putting it firmly in correction territory after the gradual declines seen over the last four weeks.
All in all, Wall Street pros and the retirement accounts of regular Americans are staring down a total of $2.5 trillion in paper losses.
The losses were broad, with every sector in the S&P 500 losing ground.
According to eToro analyst Jakub Rochlitz, the most obvious catalyst for the selloff is markets pricing in the midterm 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.
The huge selloff is also being helped along by the sky-high amount of leverage – or borrowed money – among investors.
By some indicators, markets are trading at a level of speculation not seen since the dot-com bubble: Money borrowed to finance investing – so-called ‘margin debt’ – hit a record $1.5 trillion in June, up roughly 50 percent from a year earlier.
According to Fed data, U.S. households hold a record 48 percent of their financial assets in stocks – at the peak of the dot-com bubble, that figure was 38.7 percent.
‘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.
A notable loser today is Elon Musk, who spent nearly half a billion dollars on the 2026 midterms supporting Republican candidates across the country.
Shares of his electric car company, Tesla, are down almost 12 percent today. When combined with yesterday’s brutal post-election losses, shares of Tesla have lost nearly 15 percent in two days – knocking about $39.4 billion off his fortune.
Meanwhile, SpaceX is down more than 12 percent since the election, for a shocking $113 billion in losses for Musk. Taken together, he has suffered $152 billion in paper losses since the election.
Democratic Party leaders have said they plan to take a harder line on AI regulation as they prepare to take control of Congress in January 2027.
Their priorities include mandatory safety testing, federal oversight of advanced AI models, restrictions on data-center expansion and protections against rising 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.
The next signals to watch will be guidance from hyperscalers on future capital expenditures, as well as whether they start shifting more of their future infrastructure projects outside the US to Asia or even the Middle East.
About Post Author
