US Stocks Suffer Worst Single-Day Crash Since April 2025 as Democrat Midterm Sweep Triggers AI Selloff

US equities collapsed on November 5, 2026, the day after Democrats swept the midterm elections and took control of Congress, with investors rapidly reversing their post-election optimism on fears that the new Democratic majority would impose sweeping regulations on artificial intelligence and slow the data center buildout that has underpinned the AI trade. The S&P 500 fell 4.35%, closing at 7,355.81, its worst single session since April 2025's tariff shock, while the Nasdaq Composite tumbled 5.5% and confirmed a correction, logging its deepest one-day drop in 19 months and its worst post-midterm performance since 1896. The Nasdaq 100 fell 6.4%, erasing $2.3 trillion in market value, and the Dow Jones Industrial Average shed 1,840 points, or 3.45%, to 51,515.81, wiping out the entire post-election rally from the prior session.

The catalyst was concrete: top Democrats and progressive lawmakers publicly called for a national data center moratorium immediately after the election results, rattling investors who had priced AI infrastructure spending as a durable multi-year growth engine. Chip stocks bore the worst of it, with the Philadelphia Semiconductor Index slumping 12%, its steepest decline since March 2020. Nvidia fell more than 9% on the day, and the Magnificent Seven collectively lost over $1.1 trillion in market capitalization. Tesla and SpaceX shed a combined $420 billion in value. Across the broader AI trade, cumulative losses from 2026 highs reached $13.2 trillion, with Broadcom down 41%, Micron down 48%, Alphabet down 32%, TSMC down 28%, and Meta down 25% from their peaks.

Total US market capitalization losses on the day ranged from $2.5 trillion to $3 trillion across various estimates, with MarketWatch citing the S&P 500's $2.9 trillion single-day loss as the largest on record. The VIX fear gauge surged roughly 70%, its biggest spike since Liberation Day in April 2025, though it held in the mid-20s intraday rather than signaling outright panic. Bitcoin fell 5.47% alongside equities. Goldman Sachs noted that long-only funds were frozen and hedge funds were selling hyperscaler positions they had bought just the day before. Analyst Dan Ives warned chip stocks could fall another 10% to 12%, while Fundstrat's Tom Lee called the selloff an overreaction and predicted tech could rally 20% by year-end. Morgan Stanley said the correction was nearing its end.