S&P 500 Fell 4.36% Thursday, Erasing $2.9 Trillion in Market Value, as AI Stocks Sold Off After Democratic Sweep

The post-election rally lasted one session. On Thursday, Nov. 5, the S&P 500 sank 4.36% to 7,353.73, and the Nasdaq fell 5.52% to 24,315. The Dow dropped 1,833 points, or 3.44%, to 51,523.06, wiping out all of Wednesday's 1,500-point gain.

The S&P 500's companies lost a record $2.9 trillion in market value in the session, according to figures published by the Daily Wire. The Nasdaq shed $2.5 trillion. Those are paper declines in share prices, not a measure of what any individual investor lost.

AI names took the worst of it

Nvidia fell 9%, a $374 billion drop. Tesla and Microsoft lost $161 billion and $117 billion. Broadcom fell 10% and Oracle 7%.

Qualcomm dropped 9% on a gloomy forecast, even though it beat earnings estimates. That is a company-specific reason that has nothing to do with Washington.

The "neocloud" firms that rent out AI computing power were hit hardest. Nebius fell 15% and CoreWeave 10%.

The AI trade was already under pressure before the vote. The Nasdaq had been tumbling since the prior week, and Kathleen Brooks, research director at XTB, said on Wednesday that the "recent rout" in AI-linked stocks had set the stage for a strong performance into year end. Thursday erased that.

Why the data-center fear

Sen. Bernie Sanders demanded a "national data center moratorium now." Rep. Greg Casar (D-TX) and other progressives want to halt new construction outright. Rep. Ted Lieu (D-CA) promised public hearings and new AI "guardrails."

Gina Hinojosa, who campaigned on pausing new data-center projects, defeated Texas Gov. Greg Abbott. The Daily Wire put Texas at roughly a quarter of planned U.S. data-center capacity.

Tech bull Dan Ives warned the buildout will slow sharply through 2028. UBS estimated about 30% of planned capacity could be affected.

The Democratic Party is split on how far to go. The Daily Wire also reported that some on Wall Street see the larger threat in governors and local regulators rather than Congress.

Trump blames Democrats, Democrats say costs

Trump called the slide "a sad thing to watch" Thursday evening and blamed the opposition. "Your 401(k)s have, therefore, dropped. Remember, it wasn't Republicans, it was Dumocrats," he said.

Democratic leaders describe their mandate differently. House Minority Leader Hakeem Jeffries told MS NOW's "Morning Joe" that voters don't want Democrats to "get even." He said the focus should be on lowering costs, because Americans want results rather than retribution.

Voters did not reach the polls in a vacuum. Edelman Public & Government Affairs cited rising fuel, grocery, housing and health care costs and an increasingly unpopular war in Iran as the drivers of Democratic gains. Edelman said Democrats now hold a comfortable House majority and their largest Senate margin since 2009.

Wall Street's read on 2027

Banks and big tech are first in line for oversight. Sen. Ron Wyden (D-OR), expected to chair the Senate Finance Committee, posted one word on election night: "Subpoenas." Sen. Elizabeth Warren (D-MA) is widely expected to take over the Banking Committee.

CNBC reported, citing a source familiar with the matter, that Senate Democrats are preparing to investigate JPMorgan over its relationship with the late Jeffrey Epstein. JPMorgan declined to comment to Fortune.

Market professionals mostly expect noise over law. Joann Needleman, who leads the financial services regulatory practice at Clark Hill, predicted "a tremendous amount of political theater." Ken Mahoney of Mahoney Asset Management said turning tougher rhetoric into legislation is "an entirely different challenge."

Chris Turner, global head of markets at ING, said on Wednesday that early market moves reversed in part because Democrats don't take office until January. He added that Trump accepting the results removed a wild-card risk.

Edelman expects the Trump administration to lean on agency rulemaking and executive orders to get around Congress. It also expects tougher scrutiny of companies seen as close to the White House.

What history says

RBC Wealth Management and Bloomberg research shows the S&P 500 has averaged just 4.9% annually when a Republican president faces a Democratic House and Senate. That is the lowest of six configurations studied from 1953 through 2025.

Capital Group found the index averaged a 15.4% gain in the 12 months after midterm elections since 1950, with every such period positive. Both are historical price returns, not forecasts.

Nasdaq and S&P futures bounced slightly Friday morning, while Dow futures stayed lower.

Democrats take control of both chambers when the 120th Congress convenes in January 2027. Trump has promised to veto bills he calls "insane," so the first concrete tests will be which committees open investigations and whether tech CEOs are summoned to testify under oath, as party leaders have said they want.