Post-Election Market Update: Big Swings After the Midterms
The first week of November was quite a week in the markets. In the span of three days after the November 3 midterm election, we saw the Dow's best day in more than a year and the S&P 500's worst. Here's a look at what happened, how October set the stage, and what history does (and doesn't) tell us.
A Midterm Week of Big Swings
Voters went to the polls on Tuesday, November 3, and Democrats won majorities in both the House and the Senate. Starting in January, that means one party will hold the White House and the other will control Congress.
My job isn't to weigh in on the politics. It's to help investors understand what it might mean for their money. And the market's reaction has been anything but simple.
Wednesday, November 4: relief. Stocks rallied as a clear-cut result removed some of the uncertainty that had been hanging over Wall Street. The Dow gained 1,569 points, or about 3%, its best day since April 2025.
Thursday, November 5: a sharp reversal. One day later, investors took a harder look at what the new balance of power in Washington, along with a few newly elected state leaders, could mean for the pace of data center construction behind the artificial intelligence boom. The selling was swift. The S&P 500 fell about 4.4%, its worst day since April 2025. The Nasdaq Composite fell about 5.5%, leaving it more than 10% below its October 6 record close. That's what Wall Street calls a correction. The Dow gave back 1,833 points, or 3.4%, erasing Wednesday's gain. Every sector of the S&P 500 fell, but the deepest losses were in chip and AI-related stocks. The Philadelphia Semiconductor Index dropped about 12%, its second-biggest one-day fall on record.
Friday, November 6: a strong jobs report and a partial bounce. The government reported that employers added 165,000 jobs in October, well above the roughly 65,000 economists expected, and unemployment dipped to 4.1%. By Friday's close, the S&P 500 had gained 0.3% and the Nasdaq Composite 1.1%, led by a rebound in chip stocks, while the Dow slipped 0.5%.
As of this writing, the situation is still moving, and the swings could continue in either direction.
This Didn't Start on Thursday
The pressure on technology stocks has been building for weeks. In October, investors grew more skeptical about how much companies are spending on artificial intelligence and when that spending will pay off. Disappointing outlooks late in the month led to a sharp sell-off, including a 2.86% drop in the Nasdaq Composite on October 30 alone. For the month, technology stocks fell 8.2% and the Nasdaq Composite fell 5.3%.
Meanwhile, other parts of the market had a very different October. Energy and consumer staples stocks each gained more than 10%, helped by oil climbing about 13.7%, to roughly $103 a barrel, with tensions around Iran still unresolved. Here in Canton and across Cherokee County, most of us have felt that at the pump. An equal-weighted version of the S&P 500, where every company counts the same no matter how big it is, gained about 4.9%. That beat the regular index by the widest margin since April 2009. In plain English: the average stock did much better than the handful of giant companies at the top of the index.
The Numbers Behind the Noise
Even after the post-election swings, as of Friday's close on November 6 the S&P 500 was still up about 7.8% for the year, the Dow about 6.7%, and the Nasdaq Composite about 5.8%.
Company profits have held up well. According to FactSet, 82% of S&P 500 companies that had reported third-quarter results by October 30 beat analysts' estimates, with earnings growth of about 30%. The Federal Reserve held rates steady at 3.75% to 4.00% on October 28, and October's strong jobs number raised expectations of another hike at its December 9 meeting.
What History Says (and What It Doesn't)
Midterm elections have a notable track record when it comes to the stock market:
The S&P 500 has been higher 12 months after every midterm election since 1950, 19 out of 19 times, with an average gain of about 16.6%, according to BNY's Investment Strategy & Research Group.
LPL Research has found positive S&P 500 returns in all 18 of the 12-month periods following midterms since 1954, with an average gain of 18.2%.
That pattern has held regardless of which party won or lost, according to Yardeni Research.
Now the important part. Those are 12-month numbers, and the week after this election was a good reminder that history doesn't play out on a schedule. Nineteen elections is also a small sample, and every one of those years had its own backdrop. This one includes a Fed that raised rates in September, oil above $100, inflation near 3.7%, and real questions about AI spending. History tells us what has happened. It doesn't tell us what will happen.
The Way I See It
Elections matter for plenty of reasons. But over long stretches, markets have tended to follow company earnings and interest rates more closely than which party controls which chamber.
The week after the election showed how quickly sentiment can swing. In three days, investors went from celebrating, to selling hard, to buying again after a strong jobs report. Markets swing. A good plan keeps a steady tempo. Thursday's selling hit technology hardest, and it came fast. It was largely a reaction to news about what might change in Washington and a few statehouses, rather than to the companies' latest earnings, which have generally been strong. Days like that are unsettling, but they're part of investing, and a single day rarely tells the whole story.
I won't pretend to know where this settles. What I do know is that a plan built around your goals shouldn't need a rewrite every time Washington changes hands, or every time one corner of the market has a rough week.
If you're wondering whether your plan still fits, or you just have questions about the recent volatility, reach out. I'm right here on Main Street in Canton, and I'm always glad to talk it through.
— Jack Shampine, CPFA™, J. Lyndon Financial
Source(s)/Reference(s)
"Democrats Win Control of House and Senate in Sweeping Victory: Live Election Updates." TIME, November 4, 2026 (citing Associated Press race calls).
"Dow soars 1,500 points for best day since April 2025 on clear-cut Democratic win, falling oil: Live updates." CNBC, November 4, 2026.
McGeever, Jamie. "Trading Day: A November 5 market bonfire." Reuters, November 5, 2026.
"Dow plunges 1,800 points, wiping out gains from midterm results rally." ABC News, November 5, 2026.
Kates, Stephen. "Reading the Market | November 5, 2026." Advance \ Decline, November 5, 2026. (Nasdaq Composite decline from October 6 closing high.)
"Wall Street Close: Nasdaq Rises 1.09% and S&P 500 Gains 0.32% as Dow Slips 0.46%." JournalArta Global, November 7, 2026. (November 6 closing index levels.)
"Stock Market News for Jan 2, 2026." Zacks, via Nasdaq.com, January 2, 2026. (December 31, 2025 closing index levels, used to calculate year-to-date changes.)
"Strong October jobs report sends yields higher." Reuters, via Yahoo Finance, November 6, 2026.
"Stock market today: Nasdaq, S&P 500 rebound after brutal sell-off as US adds 165K jobs." Yahoo Finance, November 6, 2026 (chip-stock rebound; December rate-hike expectations).
"Market Month: October 2026." First Financial Trust, November 2, 2026. (Nasdaq Composite monthly change, crude oil, CPI.)
"The stock market has gone almost exactly nowhere in 5 months." Opening Bell Daily, accessed November 4, 2026 (citing Bespoke Investment Group). (Sector returns; equal-weight vs. cap-weighted S&P 500.)
"US Stock Market today: S&P 500, Nasdaq and Dow Jones forecast after AI selloff." Beinsure, October 30, 2026.
Butters, John. "Earnings Insight." FactSet, October 30, 2026.
"FOMC October 2026: Fed Holds Rates in a 10-2 Vote as Markets Price a December Hike." Admirals, October 28, 2026 (citing Federal Reserve FOMC statement).
"How do midterm elections impact markets over time?" BNY Investment Strategy & Research Group, May 2026 (data as of May 4, 2026).
"SPY Could Be Poised for a Post-Midterm Rally if 70 Years of History Repeats." Benzinga, July 23, 2026 (citing LPL Financial Research).
"Stocks usually climb in the year after midterms." CNBC, November 8, 2022 (citing Yardeni Research).
The opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual.
All performance referenced is historical and is no guarantee of future results. Investing involves risk, including possible loss of principal. All indices are unmanaged and may not be invested into directly.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. Investing involves risks including the loss of principal.