The Midterm Whiplash

Relief rally, then reckoning

Most weeks grind. This one lurched. A midterm election on Tuesday set the table, and from there the market swung from euphoria to panic to an uneasy truce in the space of three sessions. Wednesday delivered one of the biggest post-election rallies in forty years. Thursday erased it and more, as the Nasdaq suffered its worst day since the spring of 2025 and fell into correction. Friday brought a bounce in the beaten-down chips, but a strong jobs report kept the pressure on, and all three major averages still finished the week in the red.

The through-line was the same trade that has powered this entire bull market: the handful of giant companies building out artificial intelligence. For one day investors cheered a political result. For the next they asked whether a new Congress might slow the AI spending spree they had been paying up for, and the answer they feared was enough to vaporize trillions of dollars in value. The week is a lesson in how fast sentiment can flip when a market is this concentrated.

The midterm sweep sparks a rally

It started with a landslide of relief. Democrats won control of both the House and the Senate in Tuesday's midterm elections, and on Wednesday the market threw a party for the certainty. The Dow soared about 1,569 points, or roughly 3 percent, its best day since April 2025 and, according to CFRA Research, its biggest single-day gain following a midterm election since 1982. The S&P 500 rose about 1.58 percent and the Nasdaq about 1.44 percent.

The rally had a logic. President Trump accepted the outcome, which lifted a cloud of political uncertainty that had hung over Wall Street, and a split government revived the old gridlock trade, the bet that a divided Washington passes fewer surprises. Oil tumbled more than 8 percent, and solar and other clean-energy names jumped double digits. Yet underneath the celebration, a different message was already flashing: the data-center builders and power-equipment makers tied to the AI buildout sagged, some as much as 20 percent, on the first worry that a Democratic Congress might rein in the spending. CoreWeave and its data-center peers were among the day's weakest links even as the indexes soared.

The AI trade cracks

On Thursday the fine print became the headline. The Dow plunged roughly 1,800 points, the S&P 500 sank 4.4 percent, down 334.89 points, to close at 7,353.73, its steepest drop since the April 2025 tariff crash, and the Nasdaq fell about 5.5 percent to 24,315.00 and tipped into correction. By the closing bell roughly 2.5 trillion dollars of market value had been erased.

The epicenter was the AI complex. NVIDIA, the single most heavily weighted stock in the index, dropped 9.3 percent and shed more than 440 billion dollars in value in one day. Palantir fell more than 10 percent at its lows and gave back roughly 40 billion dollars, its worst day since February, even though its October quarter had been a blowout. AMD fell as much as 17 percent intraday, Micron and the rest of the chipmakers booked double-digit losses, and the selling spread from silicon to software. The trigger was the fear that a Democratic-led Congress would tighten regulation and slow the data-center buildout, a worry CNBC described as turning the AI race into a war of attrition.

Qualcomm pours on the fuel

The chip story got a second blow from a company report. Qualcomm delivered its fiscal fourth quarter after Wednesday's close and actually beat, with adjusted earnings of 2.17 dollars a share on revenue of 10.32 billion dollars, both ahead of estimates. The market punished it anyway. Guidance for the current quarter came in soft, with projected earnings of 2.15 to 2.35 dollars against the 2.27 analysts wanted, and handset chip revenue fell 26 percent as a memory shortage squeezed smartphones and Apple kept shifting to its own modems. The stock sank around 9 to 11 percent and dragged chip-design peer Arm down about 7 percent with it.

The one bright spot told its own story about where the growth is going: Qualcomm's automotive revenue jumped 89 percent to a record. But a booming car business was no match for a shrinking phone business and a cautious outlook, and in a week already primed to sell anything connected to semiconductors, Qualcomm handed the bears exactly the fundamental excuse they were looking for.

The jobs report that cut both ways

Friday opened with a rebound in the names that had been crushed. The Nasdaq rose 1.09 percent to 24,579.42, the Philadelphia Semiconductor Index jumped about 4.6 percent after plunging more than 12 percent the day before, NVIDIA climbed about 5.6 percent, AMD rose roughly 8 percent, and even Intel gained about 5 percent as the group tried to find a floor.

Then the data complicated the recovery. The October jobs report landed hot: employers added 165,000 jobs, far above the roughly 59,000 economists expected, the unemployment rate ticked down to 4.1 percent from 4.2 percent, and prior months were revised higher. A labor market that strong is good news for the economy but awkward for stocks, because it lifts Treasury yields and revives the odds of a Federal Reserve rate hike in December. Those higher yields weighed on the rate-sensitive Dow, which slipped 0.46 percent to 51,285.73, the only major average to finish Friday lower, and they capped the chip rebound before it could rescue the week.

Sources

• Qualcomm fiscal Q4 2026 earnings release (Form 8-K, Exhibit 99.1), November 4, 2026: non-GAAP EPS of 2.17 dollars, guidance of 2.15 to 2.35 dollars, handset revenue down 26 percent, and automotive revenue up 89 percent.
• BLS Employment Situation, October 2026, released November 6, 2026: the 165,000 payroll gain, the 4.1 percent unemployment rate, and upward revisions.
• CNBC market live updates, November 4, 2026: reporting on the Dow's 1,569-point postelection gain and the S&P 500 and Nasdaq advances.
• CNBC market live updates, November 5, 2026: reporting on Thursday's closes, the Nasdaq's correction, and Qualcomm's drop.
• CNBC, November 5, 2026: reporting on Nvidia's loss of more than 440 billion dollars in market value on Thursday.
• CNBC market live updates, November 6, 2026: reporting on Friday's closes, the jobs report reaction, and weekly losses for all three averages.