Democrats' Midterm Sweep Triggers $3 Trillion Stock Rout as AI Trade Collapses and Rubio Denies Exit Reports

Democrats won control of both chambers of Congress in Tuesday's midterm elections, triggering one of Wall Street's worst single sessions in years on Thursday. The S&P 500 fell 4.35%, its steepest decline since the April 2025 tariff crash, while the Nasdaq Composite dropped 5.5% and closed in correction territory for the first time in 19 months. The Nasdaq 100 shed 6.4%, erasing approximately $2.3 trillion in market value, and the Dow Jones Industrial Average fell more than 1,800 points, wiping out the entire post-election rally from the day before. Total losses across the S&P 500 reached roughly $3 trillion, with some estimates approaching $3.2 trillion, making it the largest single-day destruction of market value on record by some measures.

The selling was concentrated in artificial intelligence and semiconductor stocks, driven by fears that a Democrat-controlled Congress would impose a moratorium on data center construction and tighten AI regulation. The Philadelphia Semiconductor Index fell 12%, its second-largest single-day drop on record. Nvidia tumbled more than 9%, and the Magnificent Seven collectively lost over $1.1 trillion in market capitalization. Tesla and SpaceX shed a combined $420 billion over two days. Tech stocks posted their worst session since 2020, and the VIX fear gauge surged roughly 70%, its biggest spike since Liberation Day. Retail traders dumped an estimated $265 million to $358 million in equities, the largest single-day retail selling since the COVID crash. Bitcoin fell 5.65% to $75,880 and Ethereum dropped 7.8%.

The selloff came one day after markets rallied sharply on the same election results, a reversal Goldman Sachs traders described as funds getting "sucked back in" and then rapidly de-risking. Top Democratic lawmakers moved quickly to call for a national data center moratorium, amplifying investor concern. Trump blamed Democrats for what he called "one of the worst days in stock market history" and said the country would soon be "bigger and stronger than ever before."

Separately, Bloomberg reported that Secretary of State Marco Rubio was weighing whether to leave the Trump administration following Republicans' midterm losses, and had discussed the possibility with White House officials. The State Department called the report "complete and total fake news," and by evening Rubio publicly denied it, telling the New York Times that serving through the end of Trump's term "has always been my plan." Reports from The Independent suggested Rubio was one of as many as five cabinet members considering departures, though the others were not named. NBC News also reported that Trump was considering replacing Defense Secretary Pete Hegseth, whose championing of the Iran war was seen as a factor in Republican losses. Congressional Democrats were meanwhile preparing impeachment proceedings against Hegseth as soon as the following week.

Trump signaled the administration's next moves on several fronts. He said he had met with Russian sovereign wealth fund chief Kirill Dmitriev and was "very close to settling" the Russia-Ukraine war in a deal he said would involve all of Europe. On Iran, Trump said he needed to decide whether to "go further" or "certify" the conflict so it would never recur, adding he would "rather not destroy the rest of the country if possible, but maybe I'll have to." Two senior sources told Reuters that Trump was now inclined to order major combat operations against Iran, saying he had held off until after the midterms. Trump also signed a proclamation declaring the White House Oval Office and Cabinet Room a national monument.