Democrats took Congress. Chips took the hit.
Stocks rallied the day after the midterms. A day later the chip index had its worst day since March 2020, as investors weighed what new lawmakers and governors could mean for data centers. Friday's jobs report then beat forecasts by nearly 100,000.
What drove the week
Chips took the hit. On Thursday the PHLX Semiconductor Index fell 12%, its worst day since March 2020. The Nasdaq-100 fell 6.4% and the S&P 500 fell 4.4% to 7,353.73, its worst day since the April 2025 tariff crash. Only about one in seven S&P 500 stocks rose. Chipmakers alone gave up more than $1.5 trillion in value; Nvidia lost about $450 billion. Memory and storage makers (SanDisk, Western Digital, Seagate, Micron) fell by double digits. The Nasdaq Composite closed nearly 12% below its Oct. 6 record.
The day after the vote, the market asked who gets to build the data centers.
Why chips, and why Thursday. The focus shifted to what a Democratic Congress, and newly elected governors who promised to stop or pause data-center construction, could mean for the AI build-out. Goldman Sachs estimates about 45% of planned US data-center capacity faces possible restrictions. Texas's new governor said projects already permitted can finish. The selloff came a week after the Oct. 30 drop that erased more than $1 trillion in tech value on AI-spending doubts.
Democrats took Congress, and stocks rallied first. Democrats won majorities in both the House and the Senate on Tuesday; Rep. Hakeem Jeffries is set to lead the House. On Wednesday the Dow rose 3.0%, its best day after a midterm since 1982, and the S&P 500 rose 1.6% to 7,688.62, helped by falling oil prices and Treasury yields. Thursday reversed it: the Dow's 3.4% drop was its worst second session after a midterm since 1896.
Jobs beat by nearly 100,000. The economy added 165,000 jobs in October against forecasts of about 70 thousand, and unemployment fell to 4.1%. September was revised up from 29 thousand to 60 thousand. Hourly pay rose 0.4% for the month and 3.1% from a year earlier. The Fed raised rates in September and held in October; the report keeps a December hike in play. The S&P 500 closed Friday at 7,376.86, up 0.3%.
Things to watch
The data-center pledges. Which states act, and whether projects already permitted keep their permits. Watch for the first concrete order or bill.
Chips after the drop. Applied Materials reports Thursday, the first chip-equipment report since the selloff; Nvidia reports Nov 17.
The December hike. A strong jobs report put it back in play. Tuesday's inflation report is the next test.
AI build-out balance sheets. CoreWeave (Tuesday) and Nebius (Thursday) report. Investors have been demanding higher yields from heavily borrowed data-center builders.
What's next
Inflation, two chip-industry reports and a holiday, in a lighter earnings week.
After the close. Take-Two reports ten days before its scheduled GTA VI release.
8:30 ET. No year-over-year figures this month because of the 2025 shutdown gap; the focus is the monthly change. CoreWeave reports after the close.
Stocks trade normal hours; SIFMA recommends a full close for the US bond market.
After the close. Jobless claims at 8:30 ET; Nebius reports before the bell.
8:30 ET. Producer prices rose 1.3% in September.