Nasdaq Crashes 3.4% as Democratic Sweep Triggers $3 Trillion AI Sell-Off

Mumbai, 7 November 2026: US equities ended the first full trading week of November sharply lower, with the Nasdaq Composite recording its steepest weekly decline in nineteen months as the Democratic sweep of both chambers of Congress in the 3 November midterm elections triggered a significant reassessment of artificial-intelligence investment risks. The Dow Jones Industrial Average declined 0.9% for the week, the S&P 500 lost 2.7%, and the Nasdaq Composite plunged 3.4%, according to final closing figures reported by Barron’s.

The sell-off was concentrated in technology and semiconductor stocks rather than evenly distributed across the market. Approximately $3 trillion in market value was erased on Thursday, 5 November, as investors assessed the possibility of tighter regulation affecting AI infrastructure, semiconductor supply chains and data-centre expansion. Friday’s technology-led rebound offered some relief but failed to reverse the week’s losses.

Meanwhile, stronger-than-expected October employment figures revived expectations of a December Federal Reserve rate increase, adding pressure to growth-stock valuations. Treasury yields experienced sharp fluctuations as investors alternated between safe-haven buying and concerns about persistent inflation and tighter monetary policy. The combination of regulatory uncertainty, higher interest-rate expectations and declining risk appetite defined the week’s market direction.

Dow Falls 0.9% Weekly Despite Wednesday’s Historic 1,569-Point Rally

The Dow Jones Industrial Average opened the week at 51,983.98 on Monday, 2 November, and finished Friday near 51,287.06, reflecting a reported weekly decline of 0.9%. Its weekly high of 53,356.12 was recorded on Wednesday, 4 November, following a 1,569.40-point advance, equivalent to 3.03%. The index subsequently reversed sharply, reaching a weekly low of 51,523.06 on Thursday.

Wednesday’s rally reflected initial optimism surrounding political developments and a rotation towards industrial and financial companies. Among the strongest performers, 3M (MMM) surged 9.55%, McDonald’s (MCD) gained 6.53%, and Amgen (AMGN) advanced 3.73%. However, Thursday’s market collapse erased the entire advance, with the Dow plunging 1,833.06 points, or 3.44%, as all thirty constituents finished lower.

Technology and financial stocks contributed significantly to Thursday’s weakness. Nvidia (NVDA) fell 9.26%, Microsoft (MSFT) declined 3.58%, Goldman Sachs (GS) lost 6.36%, and GE Vernova (GEV) dropped 7.5%. Nvidia subsequently rebounded 5.7% on Friday, supporting the broader recovery.

The Dow’s comparatively smaller weekly decline reflected its lower technology weighting and the relative resilience of industrial, healthcare and defensive constituents. Nevertheless, the reversal demonstrated how quickly political optimism could turn into uncertainty when regulatory concerns affected major corporate investment themes.

S&P 500 Drops 2.7% as Technology Losses Overwhelm Defensive Stocks

The S&P 500 opened the week at approximately 7,541.40 and closed Friday near 7,375.79, representing a reported weekly decline of 2.7%. Its weekly high of 7,688.62 occurred on Wednesday, while Thursday’s sell-off pushed the benchmark to a low of 7,353.73.

The most significant damage occurred on Thursday, when all eleven S&P 500 sectors closed lower. Information technology declined 7.3%, industrials lost 4.12%, and consumer discretionary fell 3.7%. Consumer staples and utilities performed relatively better, declining only 0.7% each, as investors moved towards defensive investments.

Technology accounted for the overwhelming share of the benchmark’s market-capitalisation losses. Nvidia fell 9.26% on Thursday before recovering 5.7% on Friday. Broadcom (AVGO) declined 10.43% before gaining 4.9%, while AMD (AMD) plunged 17.26% before surging 10.2% during the subsequent rebound.

Although technology stocks recovered on Friday, the sector’s 1.3% advance and the semiconductor group’s 6.5% gain were insufficient to compensate for Thursday’s losses. The S&P 500 therefore ended the week substantially lower, demonstrating the influence of AI-related companies on broader equity performance.

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Nasdaq Plunges 3.4% as Semiconductor Rout Triggers Correction Territory

The Nasdaq Composite opened the week at approximately 25,164.32 and closed Friday near 24,582, representing a weekly decline of 3.4%, according to reported closing data. Its weekly high of 25,736.51 occurred on Wednesday, while Thursday’s collapse pushed the index to 24,315.

The technology-heavy benchmark experienced its steepest single-day percentage decline in nineteen months and entered correction territory relative to its 6 October record closing high. Semiconductor companies and major AI infrastructure stocks accounted for much of the damage.

The Philadelphia Semiconductor Index (SOX) plunged 12.2% on Thursday to 9,011.14, reflecting fears that a Democratic-controlled Congress could introduce additional restrictions affecting data-centre construction, environmental approvals and semiconductor supply chains.

Nvidia declined 9.26%, Tesla (TSLA) lost 10.77%, Microsoft fell 3.58%, and AMD collapsed 17.26% during Thursday’s session. Friday’s rebound lifted Nvidia 5.7%, Tesla 5%, and Micron Technology (MU) 6.8%, while Broadcom advanced 4.9%.

Interest-rate expectations further amplified the Nasdaq’s weakness. October non-farm payrolls increased by 165,000, considerably exceeding the 65,000 consensus forecast, while unemployment declined to 4.1%. Traders consequently raised the implied probability of a December Federal Reserve rate increase to approximately 80%, compared with 68.7% earlier in the week.

Higher discount-rate expectations disproportionately affected technology companies whose valuations depend heavily on future earnings growth. This combination of regulatory uncertainty and monetary-policy concerns made the Nasdaq the weakest major US benchmark during the week.

Russell 2000 Loses 4.52% as Higher Yields Intensify Small-Cap Pressure

The Russell 2000 declined 4.52% during the week, closing at approximately 2,729.89 on Friday against an opening level of 2,858.01. Thursday alone accounted for a substantial portion of the decline, as smaller companies faced heightened selling pressure.

Unlike mega-cap technology companies, smaller businesses generally have greater sensitivity to domestic borrowing costs, financing conditions and changes in economic expectations. The stronger October employment report therefore created additional uncertainty about the Federal Reserve’s next policy decision.

The two-year Treasury yield increased by as much as seven basis points to 4.54% on Friday, raising concerns about financing expenses for smaller companies. Meanwhile, the VIX surged almost 70% on Thursday to 28.18, signalling a substantial deterioration in investor confidence.

The Russell 2000 consequently underperformed the Dow and large-cap benchmarks, reflecting its greater exposure to interest-rate volatility and the absence of a comparable mega-cap technology recovery.

S&P 100 Declines 2.5% as Mega-Cap Technology Erases Earlier Gains

The S&P 100 declined approximately 2.5% during the week, closing near 3,335 on 6 November compared with an opening level around 3,420. Its weekly high approached 3,495 on Wednesday, before Thursday’s technology-led sell-off pushed it towards 3,310.

The benchmark’s performance reflected substantial losses among the largest publicly traded technology companies. According to XTB, the combined market-value decline among major technology constituents exceeded $1 trillion on Thursday alone.

Defensive mega-cap companies, particularly those in consumer staples and healthcare, provided some protection. However, their relative resilience was insufficient to offset the losses in major technology constituents.

Dow Transportation Falls 3% While Utilities Outperform on Treasury Demand

The Dow Jones Composite Average declined approximately 3.1% during the week, closing near 7,610. The Dow Jones Transportation Average lost roughly 3%, as industrial and logistics companies experienced selling pressure following Thursday’s market rout.

The Dow Jones Utility Average performed comparatively better, declining approximately 1.5%. Its relative resilience reflected defensive positioning and the temporary decline in long-term Treasury yields during Thursday’s flight to safety.

The ten-year Treasury yield briefly approached 4.80%, supporting interest-rate-sensitive utility stocks. Transportation companies, meanwhile, remained exposed to concerns about industrial investment, economic uncertainty and broader market weakness.

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Semiconductor Index Crashes 12.2% as AI Regulation Threatens Investment Optimism

The Philadelphia Semiconductor Index experienced one of its worst trading sessions in years, plunging 12.2% on Thursday to 9,011.14. Although Friday brought a 6.57% recovery, the rebound failed to erase the damage caused by the technology sell-off.

AMD declined 17.26%, Micron Technology fell 17.46%, and Marvell Technology (MRVL) lost 16.43% on Thursday. Nvidia also declined 9.26%, demonstrating the scale of selling across companies associated with AI infrastructure.

Investors increasingly questioned whether additional regulatory scrutiny could slow data-centre expansion and alter semiconductor demand expectations. Higher Treasury yields following the employment report subsequently added pressure to valuations.

NYSE Composite Drops 2.96% as Trading Volume Signals Widespread Selling

The NYSE Composite Index declined approximately 2.96% during the week, closing near 23,955.97 on Friday. Although its losses were smaller than the Nasdaq’s, market breadth deteriorated significantly during Thursday’s sell-off.

Declining stocks outnumbered advancing constituents by approximately 6.1 to 1 on the S&P 500, while trading volume reached 26.9 billion shares against a twenty-session average of 17.7 billion.

The figures indicated that the sell-off extended beyond semiconductor companies, affecting financial, industrial and consumer-related businesses. Nevertheless, the Nasdaq’s larger decline confirmed that technology remained the principal source of market weakness.

Mid-Cap and Small-Cap Indices Fall as Rate Expectations Tighten Financing Conditions

The S&P MidCap 400 declined approximately 3.2% during the week, closing near 3,078, while the S&P SmallCap 600 lost roughly 3.8%, finishing near 1,424.

Both benchmarks experienced pressure from rising borrowing-cost expectations and deteriorating investor sentiment. The October payrolls surprise reinforced expectations of tighter monetary policy, creating additional uncertainty for companies dependent on external financing.

Thursday’s sharp increase in volatility further weakened demand for smaller-company shares. Friday’s technology rebound provided limited relief because mid-cap and small-cap companies did not benefit equally from the recovery in semiconductor stocks.

Democratic Midterm Sweep Triggers $3 Trillion Sell-Off Across AI-Linked Equities

The 3 November US midterm elections became the week’s most significant political catalyst after Democrats secured control of both chambers of Congress. Investors interpreted the outcome as increasing the possibility of tighter oversight of artificial-intelligence infrastructure, data centres and semiconductor supply chains.

The market reaction intensified on Thursday, when the Nasdaq Composite plunged 5.52%, the S&P 500 declined 4.36%, and the Dow dropped 3.44%. The semiconductor index lost 12.2%, while approximately $3 trillion in market value was erased from S&P 500 companies.

The CBOE Volatility Index surged 69.66% to 28.18, representing its third-largest single-day percentage increase since 1990. The scale of the reaction demonstrated how dependent market valuations had become on expectations of continued AI-related investment.

October Payrolls Hit 165,000 as Unemployment Falls to 4.1%, Lifting Rate-Hike Bets

October’s employment report, released on Friday, 6 November, delivered a stronger-than-expected signal of labour-market resilience. Non-farm payrolls increased by 165,000, compared with expectations of 65,000 and September’s reported gain of 29,000. The unemployment rate declined from 4.2% to 4.1%, while average hourly earnings rose 3.1% year-on-year.

The stronger figures increased expectations of continued economic resilience but also raised concerns about inflationary pressure and monetary tightening. Traders raised the implied probability of a quarter-point Federal Reserve rate increase in December to approximately 80%, from 68.7% earlier in the week. The two-year Treasury yield climbed as much as seven basis points to 4.54%.

Earlier indicators also pointed to continued economic strength. ADP reported 86,000 additional private-sector jobs in October, exceeding expectations of 67,000. Meanwhile, the ISM Services PMI eased to 54.5 from 54.9 in September, slightly missing expectations of 54.8 but remaining in expansion territory.

Together, the indicators reinforced the view that the US economy remained resilient, complicating expectations for the Federal Reserve’s December policy decision.

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Treasury Yields Reverse Direction as Safe-Haven Buying Meets Hawkish Employment Data

Treasury markets experienced considerable volatility as investors responded to political uncertainty, equity losses and economic data. On Thursday, the market sell-off triggered demand for government bonds, pushing the two-year yield below 4.5% and the ten-year yield towards 4.80%.

The direction reversed following Friday’s employment report. The two-year yield climbed to 4.54%, while the ten-year yield finished around 4.82–4.86%. The thirty-year yield settled near 5.24–5.28%.

The contrasting movements reflected two competing forces: safe-haven demand supported bonds during Thursday’s panic, while stronger employment figures revived expectations of tighter monetary policy. This yield volatility influenced sector performance, temporarily supporting utilities before renewed pressure emerged in growth-oriented equities.

Brent Crude Falls 17.5% as Iran Peace Hopes Overwhelm Supply Concerns

Brent crude declined approximately 17.5% during the week, falling from around $117 per barrel to $97.10 on Friday. WTI crude also suffered substantial losses, dropping more than 12% from approximately $104 to around $91.

The initial decline reflected expectations that the Democratic election victory could improve prospects for a negotiated resolution to the US-Israeli conflict with Iran. On Wednesday, WTI settled at $88.94, while Brent closed at $94.62.

However, renewed attacks on tankers in the Gulf revived concerns about potential supply disruptions. Brent subsequently gained 3.88% on Thursday to $98.29, while WTI advanced 2.72% to $90.52. Despite the recovery, both benchmarks remained sharply lower for the week.

Gold Advances 4.1% as Equity Turmoil and Dollar Weakness Boost Safe-Haven Demand

Spot gold gained approximately 4.1% during the week, closing at $4,060.40 per ounce on Friday, its strongest weekly performance since August. Prices moved towards $4,110 during the week, supported by increased demand for defensive assets.

The equity-market rout and political uncertainty encouraged investors to increase exposure to precious metals. A weaker US dollar also provided additional support by making dollar-denominated bullion comparatively attractive to international buyers.

Dollar Index Slips 0.3% as Yen Strengthens During Global Market Uncertainty

The US Dollar Index declined approximately 0.3%, closing at 101.55 on Friday against an opening level near 101.85. It reached a weekly high of approximately 102.12 and a low near 101.25.

EUR/USD finished at 1.1222, gaining approximately 0.5% during the week, while USD/JPY closed near 157.40 as the Japanese yen strengthened around 0.2%.

The dollar weakened during Thursday’s equity rout as investors sought alternative safe-haven currencies, particularly the yen and Swiss franc. Friday’s stronger employment report subsequently supported expectations of tighter US monetary policy and helped stabilise the currency.

VIX Surges 69.66% to 28.18 as Investors Rush for Portfolio Protection

The CBOE Volatility Index opened the week at 19.42 on Monday and closed Friday at 24.67, representing an increase of approximately 27%. Its weekly high of 28.36 occurred on Thursday, while its low of 16.61 was recorded on Wednesday.

Thursday’s 69.66% single-day increase was its third-largest percentage jump since 1990. The sudden rise reflected increased demand for downside protection as investors reassessed technology valuations and political risks.

Although equities recovered on Friday, the VIX remained elevated, indicating that investors continued to anticipate potential market instability. The CBOE Nasdaq Volatility Index also remained above its weekly low, confirming heightened uncertainty surrounding technology stocks.

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Technology Loses 7.3% as Defensive Sectors Limit Thursday’s Market Damage

All eleven S&P 500 sectors experienced weekly declines, although the magnitude varied considerably. Information technology suffered the largest losses, falling approximately 7.3%, as semiconductor companies and AI infrastructure stocks faced intense selling.

Industrials declined 4.12%, consumer discretionary fell 3.7%, and energy experienced additional pressure from falling crude prices. Consumer staples and utilities were comparatively resilient, declining approximately 0.7% each during Thursday’s sell-off.

The weekly rotation demonstrated investors’ preference for defensive businesses amid heightened uncertainty. Financials also displayed relative resilience, supported by economic growth expectations and changing Treasury yields.

Technology remained the weakest sector because of its exposure to AI-related investment expectations and higher discount rates. Friday’s rebound provided some relief, but it did not reverse the broader weekly decline.

AMD Gains 10.2% Friday While Micron and Nvidia Lead Technology Rebound

The week’s strongest individual trading performances were concentrated in semiconductor stocks that recovered sharply following Thursday’s collapse. AMD surged 10.2% on Friday after losing 17.26% during the previous session. Micron gained 6.8%, Nvidia advanced 5.7%, and Broadcom rose 4.9%.

Other notable gainers included 3M, which surged 9.55% on Wednesday, and McDonald’s, which advanced 6.53%. Apple and Microsoft also reached fresh record highs during Wednesday’s rally before experiencing losses during the subsequent market reversal.

The largest declines occurred among AI-related and semiconductor companies. Micron lost 17.46%, AMD fell 17.26%, Marvell declined 16.43%, Tesla dropped 10.77%, and Nvidia lost 9.26% on Thursday.

The Magnificent Seven collectively experienced significant pressure, with Tesla leading Thursday’s declines, followed by Nvidia, Meta Platforms, Microsoft, Alphabet, Amazon and Apple. Their combined market value declined by as much as $1 trillion during the session.

Friday’s recovery lifted the Roundhill Magnificent Seven ETF approximately 1.9%, but the improvement was insufficient to reverse the group’s weekly losses. The performance of these companies remained central to movements across the Nasdaq, S&P 500 and Dow.

Federal Reserve Holds Rates Steady as Markets Raise December Hike Expectations

The Federal Reserve did not announce a new interest-rate decision during the week. Its latest policy meeting on 27–28 October left the federal funds target range unchanged at 3.75–4.00%.

Markets nevertheless reassessed the monetary-policy outlook following the stronger employment report. The probability of a December quarter-point increase rose to approximately 80%, compared with 68.7% earlier in the week.

Treasury yields reflected this adjustment, with the two-year yield ending near 4.54%, the five-year around 4.65%, the ten-year near 4.86%, and the thirty-year approximately 5.24–5.28%. The ten-year yield declined around seven basis points over the week as safe-haven demand partly offset the impact of higher short-term rate expectations.

The two-year and ten-year spread remained approximately 28–32 basis points, indicating a modestly steeper yield curve. The changing expectations created additional pressure on technology valuations while influencing financial-sector performance and broader investment positioning.