Stock market meltdown as $2.5trillion is wiped out in Wall Street bloodbath after Democrats' midterms victory rally turns to financial carnage

The stock markets have taken a massive $2.5 trillion hit just one day after the Democrats' blue tsunami drowned Republicans in the midterm elections.

Stocks related to the artificial intelligence trade were decimated - with tech companies supplying data centers and microchips being the hardest hit.

The nationwide Democratic victories triggered financial carnage for Wall Street, as their control of the Senate raises the possibility that governments may pause construction of more data centers across America. 

That would mean fewer purchases of AI chips and other super intelligence tech-related products, which are currently driving much of the US economy's growth. 

As a result of the uncertainty, shares of chip manufacturers Nvidia and Broadcom saw stunning losses on Thursday - NVDA fell 9.3 percent on the day while AVGO dropped 10.5 percent – and competitor Qualcomm finished the session down 9.5 percent. 

The tech-heavy Nasdaq Composite ended the day down 5.5 percent, putting it firmly in correction territory after the gradual declines seen over the last four weeks - while the benchmark S&P 500 index fell 4.3 percent.

Both indices saw their worst one-day declines since President Donald Trump shook markets worldwide in April 2025 after announcing his 'Liberation Day' tariffs.

All in all, Wall Street pros and the retirement accounts of regular Americans are staring down a total of $2.5 trillion in paper losses. 

The tech-heavy Nasdaq Composite fell nearly 5 percent, putting it firmly in correction territory after the gradual declines seen over the last four weeks. The benchmark S&P 500 was down 3.6 percent as of midday

Trump speaks in public for the first time since the sweeping GOP loss in the midterms on Wednesday in DC 

The losses were broad, with every sector in the S&P 500 losing ground. 

According to eToro analyst Jakub Rochlitz, the most obvious catalyst for the selloff is markets pricing in the midterm results.

'But the first domino to fall was Anthropic's and OpenAI's growth numbers, which failed to impress investors at the beginning of October,' Rochlitz told the Daily Mail.

'That made the market more sensitive to negative news, which has piled up in recent days.'

'The midterm election result didn't really create a new fear, it was just the gust of wind that pushed over the house of cards that was already getting shaky,' former Goldman Sachs analyst Nic Puckrin told the Daily Mail.

The huge selloff is also being helped along by the sky-high amount of leverage - or borrowed money - among investors. 

By some indicators, markets are trading at a level of speculation not seen since the dot-com bubble: Money borrowed to finance investing - so-called 'margin debt' -  hit a record $1.5 trillion in June, up roughly 50 percent from a year earlier.

According to Fed data, U.S. households hold a record 48 percent of their financial assets in stocks - at the peak of the dot-com bubble, that figure was 38.7 percent. 

A wave of local election results has exposed the scale of growing opposition to data centers, with voters across the country overwhelmingly backing measures to restrict their construction. Pictured, an AI protest in New York

'What the markets were missing was a spark to start the selloff. It seems that the mix of the election result and some disappointing tech earnings results was enough to tip markets over the edge,' Rochlitz told us.

A notable loser today is Elon Musk, who spent nearly half a billion dollars on the 2026 midterms supporting Republican candidates across the country.

Shares of his electric car company, Tesla, are down almost 12 percent today. When combined with yesterday's brutal post-election losses, shares of Tesla have lost nearly 15 percent in two days - knocking about $39.4 billion off his fortune.

Meanwhile, SpaceX is down more than 12 percent since the election, for a shocking $113 billion in losses for Musk. Taken together, he has suffered $152 billion in paper losses since the election.

Democratic Party leaders have said they plan to take a harder line on AI regulation as they prepare to take control of Congress in January 2027. 

Their priorities include mandatory safety testing, federal oversight of advanced AI models, restrictions on data-center expansion and protections against rising electricity bills.

'It will take months for the market to figure out what impact the Democrats will really have on the AI buildout, and the impact on data center construction will take even longer to actually materialize,' Puckrin told us. 

The next signals to watch will be guidance from hyperscalers on future capital expenditures, as well as whether they start shifting more of their future infrastructure projects outside the US to Asia or even the Middle East.

A notable loser today is Elon Musk, who spent nearly half a billion dollars on the 2026 midterms supporting Republican candidates across the country

Nic Puckrin, markets expert and former Goldman Sachs analyst

In the background, the success of a huge wave of local anti-AI ballot measures exposed widespread opposition to data centers, as voters across the country overwhelmingly backed measures to restrict or prevent their construction.

They ranged from outright construction bans and temporary moratoriums to restrictions on energy consumption and requirements for residents to approve projects before work can begin.

Today's stock massacre is a far cry from the numbers Wall Street saw on Wednesday morning, after the Democrats seized control of both houses in a victory that gave them the power to block President Trump's legislation.

Following the release of results from across the country, stock markets saw decent gains after the Republican party suffered massive political loss. 

Trump posted about the surge on Truth Social, taking credit for the stock market boom: 'Stock Market just hit another Record High — 91 Days in just a short period of time — Less than two years. Your 401(k)s are through the roof. Record Setting All!'