Wall Street cheered the Democrats' win Wednesday, blamed it Thursday

Wednesday: the vote lifted the market

On Wednesday, November 4, the day after the US midterm elections, Wall Street rallied. The Dow Jones gained 3% on the session, the Nasdaq 1.4%. The Guardian put it down to the Democrats' success: investors figured they could put the brakes on the White House.

On Thursday, November 5, the Nasdaq dropped 5.5%, its worst session since April 2025. About $2 trillion in market value vanished, according to the same Guardian, which this time blamed the Democratic win. The analysts it quotes worry that newly elected Democratic governors will slow data center construction, after a string of local votes where residents turned the projects down.

So the same election result was used to explain a rally and then a rout, twenty-four hours apart. A market is allowed to change its mind overnight. But it's worth checking what the index was doing before anyone had voted.

The Thursday-night story

The Thursday explanations are crisp. Neil Wilson, a strategist at Saxo UK quoted by the Guardian, describes outright capitulation in tech: investors fear Democrats will slam the brakes on data centers, and everybody is selling at once. He himself considers the move very overdone. Analyst Dan Ives argues that Democratic control of Congress, the Senate above all, will put obstacles in front of AI in Washington for the next two years.

Donald Trump offered the shortest version on Truth Social: stocks fell because the Democrats, whom he calls "Dumocrats," won on Tuesday.

A quick definition before going further. An index is said to be in "correction" when it sinks more than 10% below its latest record. By Thursday night, the Nasdaq was there. But a single -5.5% session doesn't make -10%. The index had to be well down already.

The Nasdaq Composite is the US index where most big tech names are listed: Nvidia, Apple, Microsoft, Alphabet, Amazon and Meta carry enormous weight in it. When people say "tech" is tumbling, it's usually the one they're watching.

Close by close

We went back through the Nasdaq Composite's daily closes since its record, 27,599.79 points on Tuesday, October 6. The steps that matter:

• October 14: -1.9%.
• October 16: -2.2%.
• October 22: -2.6%. The index is now 5.8% below its record.
• October 29: -1.4%, the day after Alphabet's results.
• October 30: -2.9%, the day after Intel's results.
• Monday, November 2, the day before the vote: 25,164 points, 8.8% below the record.
• Tuesday the 3rd, election day: +0.8%. Wednesday the 4th: +1.4%.
• Thursday the 5th: -5.5%, at 24,315 points, 11.9% below the record.

Nearly three quarters of the decline had happened before the polls opened. Thursday pushed the index past the 10% line; it didn't start the slide. The vote is getting blamed for the last step of a staircase the market had been walking down for a month. And nobody could pin the early October losses on a vote that hadn't taken place yet.

What the market saw before the ballots

Two of the pre-vote sessions followed earnings reports, and we can read what those reports said. They don't describe an AI boom running out of steam.

On October 29, Alphabet, Google's parent, lost 12.6% in a single session. The release the evening before announced no slowdown at all: revenue up 25%, cloud business more than doubled.

It also announced $51.4 billion in capital spending for the quarter, against $24 billion a year earlier, and negative free cash flow for the second quarter in a row. Alphabet is spending more than its business brings in as cash, like a restaurant that's packed every night and borrows to open three more dining rooms. Broker XTB says the market is looking harder and harder at what it costs to finance the AI race.

On October 30, Intel lost 28.6%. Its year-end revenue forecast came in below what analysts expected, and its CFO warned that the PC slowdown would last until at least mid-2027. In the same release, Intel touted its strongest data center growth in fifteen years.

So on the eve of the vote, the accounts showed a giant punished the day after saying it spends more than it takes in, and a chipmaker punished over PCs while its data center sales were speeding up. You can read a lot into that. What you can't read is a market that was doing fine until Tuesday night.

The Thursday story isn't wrong, just short

Let's be fair to the political reading. On Wednesday, while the index rose, the stocks most tied to data centers were already falling: Nvidia -3.2%, memory maker SanDisk -7.9%. On Thursday they led the rout, with SanDisk at -22%, Western Digital at -17% and Nvidia at -9%. The gains that day came from elsewhere: Microsoft rose 6.7%, Amazon 6.1%, Apple 5.3%. The vote may well have weighed on data center stocks, Wednesday as much as Thursday.

But those stocks hadn't waited for the ballot either: SanDisk lost 13.5% on October 30 and 6.6% on November 2. Kyle Rodda, an analyst at Capital.com, says as much in the Guardian's live coverage: political risk is landing while the AI bet already rested on shaky ground, after a disappointing earnings season for markets. He also sees signs that AI spending is slowing, even as Alphabet speeds up its own. The signals from before the vote don't all point the same way, which is exactly why none of them makes an explanation on its own.

A political explanation has one big advantage over five weeks of mixed earnings: it fits in a sentence, and it has a date. It's the storm getting blamed for felling a tree everyone had watched lean for weeks.

What we don't know

On Friday morning the shock rolled across Asia: Japan's Nikkei closed down almost 6%, Seoul's market closed down close to 6% as well, and Taiwan lost 4.6%. At 8:30 a.m. Eastern on Friday, the Labor Department released its October jobs report: 165,000 nonfarm jobs added, and an unemployment rate of 4.1%, down from 4.2% in September (preliminary Bureau of Labor Statistics data). Thursday wasn't an ordinary session; it was the worst since the tariff panic of April 2025. But nobody can say today whether Thursday opens a new stretch or closes one, and the closing prices can't settle that.

What they can do is date things. The slide began the day after the October 6 record, four weeks before the election. The November 3 vote is simply the cause that landed on the right day.