US stocks lose $2.8 trillion in record selloff after midterm elections

US equity markets experienced a historic correction in the week following the US midterm elections, where Democrats won both chambers of Congress. On Thursday, the Nasdaq 100 fell over 6% and the Philadelphia Semiconductor Index dropped more than 12%, resulting in a total market capitalization loss of $2.8 trillion. This figure exceeds the $2.7 trillion loss recorded during the pandemic, marking the most expensive trading day in history. The S&P 500 fell 4.4% for its fourth consecutive losing week, while the DAX ended the week slightly positive.

The selloff was triggered by fears that the new Democratic majority would impose a moratorium on data center construction in key states like Texas and Ohio, potentially slowing AI adoption. Analysts noted that the crash was exacerbated by mechanical deleveraging in hedge funds, with reports that large funds such as Walleye and Lone Pine were liquidated or returned capital. Fundstrat’s Tom Lee told CNBC that forced selling, rather than fundamental shifts, drove the decline, noting that NVIDIA traded at a 13x multiple despite the volatility. Individual stocks showed extreme divergence, with Rheinmetall falling 22% and Infineon dropping 10%, while Amazon rose 8% and Moderna gained 15%.

Investors rotated from high-momentum AI stocks to quality and dividend sectors. The Magnificent 7 lost a combined $1 trillion in market cap, with Micron falling 17.5% and SanDisk plummeting 22.3%. While some analysts compare the move to a temporary shakeout similar to 1997-1998, others warn of structural risks if AI capital expenditure constraints persist. President Trump remained silent during the decline, a shift attributed to the Republican loss of control over one chamber of Congress, which reduced the incentive for active market stabilization.