Tech stocks slide as Democrats' midterm win fuels fears of AI regulation

Democrats take Congress and markets reverse

Democrats won control of both the House of Representatives and the Senate in the midterm elections held on 3 November 2026. They take over the congressional committees in January, which gives them a platform to summon company executives and push new legislation. Republican President Donald Trump remains in the White House with veto power, and overriding a veto requires a two-thirds majority in both chambers, which Democrats do not hold. Markets rose on Wednesday, 4 November, as initial election results became clear, but the mood turned within a day.

Thursday's sell-off on Wall Street

On Thursday, 5 November, the Nasdaq Composite dropped 5.52%, its steepest one-day fall since April 2025, according to France Presse. The S&P 500 lost 4.36% and the Dow Jones Industrial Average fell 3.4%, which The Independent put at 1,833.06 points. Chip makers took the heaviest losses, with Broadcom down 10.15%, Micron down 17.17% and AMD down 17.39%, while Nvidia fell 8.91%, a loss of about 400 billion dollars. Estimates of the total value erased differ: CNN calculated about 2,500 billion dollars, a separate figure puts technology companies at about 3,200 billion, and another puts S&P 500 companies above 3,000 billion.

Nasdaq Composite-5.52%

S&P 500-4.36%

Dow Jones Industrial Average-3.4%

Nasdaq Composite

-5.52 %

S&P 500

-4.36 %

Dow Jones Industrial Average

-3.4 %

Data from the article text

Musk's companies and the Texas factor

Tesla and SpaceX, both headquartered in Texas, were among the hardest-hit holdings linked to Elon Musk. Tesla shares fell about 11% on Thursday and SpaceX shares about 9%. Dow Jones Market Data calculations, reported by MarketWatch, put the combined market value loss at 456 billion dollars over two trading days, with Tesla losing 216 billion and SpaceX about 240 billion. Gina Hinojosa, the Democrat who defeated Republican incumbent Greg Abbott in the Texas governor's race, said in a CNN interview that she would push laws to protect residents from data centers in rural communities and that operations should be halted until such protections exist. Musk said on Wednesday that he had spent 158 million dollars promoting Ken Paxton, the Republican Senate candidate in Texas, and James Talarico is set to become the state's next US senator.

Tesla216

SpaceX240

Tesla

216 $ billion

SpaceX

240 $ billion

Data from the article text

Washington's AI agenda

Democrats plan a wave of bills on AI systems and data center development, according to lawmakers, their aides and activists. The proposals include protecting consumers from higher electricity costs linked to data centers, requiring independent testing of advanced AI systems, and clarifying when AI companies can be held liable for harm caused by their products. Representative Greg Casar, a Texas Democrat who chairs the Congressional Progressive Caucus, has said AI company chief executives should be called to testify under oath. During the campaign, several Democratic candidates promised to limit or halt construction of new data centers, a stance that has raised concern among investors who see the industry's spending as dependent on those facilities. Analyst Garrett Nelson of CFRA described the prospect as an additional pressure on tech companies' multibillion-dollar AI investments.

Trump's response and the spread abroad

Trump blamed Democrats first and then voters, writing on Truth Social on Thursday that voters had only themselves to blame for the market fall and rejecting any responsibility on the Republican side. In Asia on Friday, 6 November, Japan's Nikkei 225 closed down about 6% and South Korea's Kospi also closed down about 6%. SK Hynix shares lost 10.4% and Samsung Electronics fell between 6.4% and nearly 10%, depending on the report. Early trading in Europe on Friday showed the Stoxx Europe 600 down 1.2%, Germany's DAX down 1.6%, and the CAC 40 in France and the FTSE 100 in London each down 1.4%. The MSCI AC Asia index lost more than 4%.