Wall Street suffered one of its sharpest tech-led selloffs in years after Democrats swept Congress in the U.S. midterm elections. More than $3 trillion in market value disappeared in a single day, with the losses concentrated in the very companies that had driven the bull market higher.
The Nasdaq 100 tumbled 6.36%, putting the index firmly in correction territory. The S&P 500 dropped more than 4%. Tesla led the decline, falling 10.77%. SpaceX, which is closely tied to Elon Musk, was reported down 9%. Musk’s personal net worth fell by roughly $113 billion. CoreWeave and Palantir each lost close to 10%. The Magnificent Seven group alone shed about $1 trillion in market capitalization.
The selling was not limited to the United States. In Asia, South Korea’s KOSPI sank 6.02% and Japan’s Nikkei 225 fell 5.96%. China’s CSI 300 declined 1.44%. In Europe, the Stoxx 600 was off 1.52% and the FTSE 100 lost 1.92%. Brent crude slipped toward $96 per barrel, and bitcoin dropped to around $76,117.
Why the market recoiled
Investors interpreted the election outcome as a turning point for the artificial-intelligence buildout. Democrats are expected to take a harder look at the power and water demands of AI data centers, which have become unpopular with voters in states where electricity costs and infrastructure strains have risen. The prospect of tighter permitting, environmental review and utility regulation raised doubts about the pace of future spending.
President Trump blamed the selloff on voters who rejected Republican candidates. In a post on Truth Social, he called the decline one of the worst days in market history and said retirement accounts had dropped because of Democratic policies. The message appeared aimed at shifting responsibility for a rout that hit companies aligned with his own allies and donors.
Analysts debate whether the drop is overdone
By the following morning, U.S. equity futures suggested a partial rebound. Nasdaq futures were up 1.18% and S&P 500 futures added 0.24% ahead of the New York open. Some strategists argued the selling had moved too far, too fast, and that the underlying businesses remained strong even if their valuations had become stretched.
Dan Ives, a prominent technology analyst at Yorkville Ives, told clients that the peak in big-tech capital spending may now arrive in 2027 rather than 2028 or 2029. He estimated that 10% of the 800 to 1,000 planned AI data centers might not be built, and that another 20% could face a longer regulatory path. Even so, he compared the current selloff to the March 2020 pandemic plunge and the April 2025 tariffs-driven decline, both of which he described as buying opportunities for long-term technology investors.
Jim Reid of Deutsche Bank noted that the market has already been rotating out of technology and communication-services stocks and into consumer staples and healthcare. Technology and communication services were down roughly 16% and 13% over the past month, while staples and healthcare rose about 14% and 11%. The heavy weighting of tech in the major indexes means that even when most stocks rise, the benchmark can fall.
What comes next
The election result has introduced a new variable into the AI investment thesis. For two years, capital has poured into data centers, semiconductors and cloud infrastructure with few political constraints. That environment is now changing. Lawmakers have begun calling for closer scrutiny of energy use, land allocation and the concentration of computing power in a handful of companies and regions.
The immediate question for markets is whether the overnight futures bounce marks a durable bottom or simply a pause before more selling. The longer question is whether the AI expansion can adapt to a world where growth and regulation move in parallel. Either way, the calm that characterized much of 2026 has been broken.
