Nasdaq Enters Correction as Midterm Results Hit Chip Stocks
U.S. stock markets plunged on November 5, 2026, as investors rotated out of semiconductor stocks following a Democratic sweep of the midterm elections.
The NASDAQ Composite fell 4.2% on November 5, 2026, entering correction territory after dropping more than 10% from its record close. The sell-off was driven by a rotation out of semiconductor and artificial intelligence stocks following a sweeping Democratic victory in the U.S. midterm elections. Investors fear that Democratic control of both chambers of Congress will lead to stricter AI regulations and restrictions on massive data centers, a sentiment intensified by the election of Gina Hinojosa as governor of Texas.
Major chipmakers suffered significant losses, with Nvidia Corporation shares shedding 7.3% and the Philadelphia Semiconductor Index falling over 8%. The downturn extended to Asian markets, affecting Samsung Electronics, SK Hynix, and Taiwan Semiconductor Manufacturing. Arm shares tumbled nearly 11% after missing royalty revenue expectations, while Qualcomm shares also declined. The broader market mirrored this slide, with the Dow Jones Industrial Average falling more than 800 points and the S&P 500 dropping 2.2%.
Separate from the political sell-off, several companies saw volatility based on quarterly results. Unity Software shares surged 22% and AppLovin rose 19% on strong earnings, while Zillow sank 15% and Snap tumbled 10% after missing key metrics. In the fast-food sector, The Wendy's Company shares remained stable after the company rejected a $1.4 billion takeover bid from a group led by Trian Fund Management.
