From high-flying AI stocks to tariff-hit alcohol companies, the midterms shook up Wall Street

Live updates

1. 1h ago

   Democratic midterm sweep rattles Wall Street, hitting AI and defense stocks

   Markets reversed post-election gains Thursday after Democrats won control of both chambers of Congress. AI-related shares fell sharply on fears a Democratic Congress will restrict data-center expansion, while defense and oil stocks dropped on expectations of an end to the U.S.-Iran war. Hospital and liquor companies rose on hopes for restored government funding and tariff relief. The Dow, S&P 500, and Nasdaq all plunged in a dramatic reversal.

   Why it matters

   Historically, U.S. stocks tend to rise after midterms regardless of party, but analysts are debating whether policy shifts on AI regulation, energy, and trade make this cycle different. The Democratic sweep also raises questions about the path of interest rates and fiscal spending. Investors are reassessing sector exposure amid uncertainty over legislative priorities.

   What is confirmed

   • Democrats won an overwhelming victory in the midterm elections, securing control of both chambers of Congress.
   • The Dow, S&P 500, and Nasdaq plunged Thursday, erasing post-election rally gains.
   • AI-related stocks fell on concerns a Democratic Congress will restrict data-center development.
   • Defense and oil shares dropped on expectations Democrats will push to end the U.S.-Iran war.
   • Hospital stocks rose on anticipation of restored or increased government program funding.
   • Liquor and other tariff-hit companies rose on hopes for trade relief.

   Still unconfirmed

   • SpaceX shares fell on fears of Democratic retribution against Elon Musk, though Deutsche Bank recommended buying the dip.
   • Historical patterns suggest stocks typically rise after midterms, but some analysts argue this time may differ due to policy shifts.

   What to watch next

   • Democratic legislative agenda on AI regulation and data-center permits
   • Progress on legislation to end U.S. involvement in the Iran conflict
   • Federal Reserve signals on interest-rate path amid changed fiscal outlook
   Sources used for this update (19)

   1. The Economist — What markets make of the midterms
   2. CNBC — Here's what the Democratic election rout could mean for the U.S. economy
   3. Yahoo Finance — Stock market today: Dow, S&P 500, Nasdaq plunge in dramatic reversal, giving back post-election rally gains
   4. CNBC — Democrat sweep gives markets a reason to rethink path of interest rates
   5. Reuters — COMMENTARY: Morning Bid: Out of the blue
   6. WSJ — Opinion | Politics Shakes Up the Markets
   7. Reuters — COMMENTARY: US stocks always rise after midterms. Is this time different?
   8. AP News — From high-flying AI stocks to tariff-hit alcohol companies, the midterms shook up Wall Street
   9. CNBC — These five stock groups could rally after Democrats' midterms sweep, analysts say
   10. Yahoo Finance — Stock Market Faces a Worst-Case Scenario After Midterm Elections. History Says This Will Happen Next.
   11. CNBC — SpaceX is down big on fears of Dem 'retribution' against Musk. Deutsche Bank says buy the dip
   12. 24/7 Wall St. — Democrats Just Swept Congress — and 80 Years of Stock Market History Says This Happens Next
   confidence 85%