Nov 6 (Reuters) – Jolted investors head into next week with the US stock market on shaky ground, as deep selling in the pivotal AI trade creates unease ahead of the release of inflation data and <a href="https://bitcomme.com/compared-to-estimates-shopify-shop-q3-<a href="https://bitcomme.com/3-japanese-growth-stocks-with-at-least-13-earnings-growth/” title=”3 Japanese Growth Stocks With At Least 13% Earnings Growth”>earnings-a-look-at-key-metrics/” title=”Compared to Estimates, Shopify (SHOP) Q3 Earnings: A Look at Key Metrics”>earnings reports from several technology companies
Stocks were slammed on Thursday by concerns that widespread victories by Democrats in Tuesday’s US midterm elections would slow the AI data-center buildout. That fed anxiety about a trade that has been at the heart of the market’s rally this year.
The tech-heavy Nasdaq Composite closed Thursday nearly 12% below its October 6 all-time high, exceeding the 10% threshold that confirms a correction. That and other major losses for equity indexes reversed the previous session’s gains in the immediate aftermath of Tuesday’s midterm elections, in which Democrats routed President Donald Trump’s Republicans and won control of the US Congress.
Tech stocks led a modest rebound on Friday, but the major indexes still posted weekly losses.
With volatility rising, tests for the market arrive next week. On Tuesday, the government will release the monthly consumer price index report, perhaps the most closely watched inflation measure. Earnings reports are due from tech companies CoreWeave, Applied Materials and Cisco Systems.
“It is a fragile momentum trade,” said Marvin Loh, senior global macro strategist at State Street. “You have got this regulatory, political party overhang, which I think is going to stay with us until we really get a sense of how significant of a slowdown we’re thinking about.”
VOLATILITY SPIKES AFTER MIDTERM RESULTS
Stocks endured severe swings in the wake of Tuesday’s midterms. In addition to winning control of the US Congress, Democrats also won several key governors’ races in data-center-heavy states such as Texas. Public backlash about environmental and other concerns over the spread of data centers was a prominent issue in the midterms.
Sharp gains on Wednesday in major equity indexes were accompanied by a slide in oil prices. That gave way on Thursday to steep equity declines, when the Cboe Volatility Index also hit a seven-month high.
Selling was widespread on Thursday — with all S&P 500 sectors ending lower — but it was most acute among AI and tech stocks. The S&P 500 tech sector sank 7.3%, while the Philadelphia SE Semiconductor index tumbled over 12% — both posting their biggest one-day drops in more than six years.
Major indexes were still logging gains for the year, with the benchmark S&P 500 up nearly 8% in 2026.
