Democrats Surge in 2026 Midterms as Nasdaq Drops for Fourth Week
- Democrats gained significant control in the US midterm elections.
- Sensex and Nifty ended their winning streak during Diwali Muhurat trading.
- BlackRock maintains conviction in AI despite intense scrutiny of earnings.
- Nasdaq recorded its fourth consecutive weekly decline amid tech volatility.
- Investors are watching US jobs data for signs of wage pressure.
The 2026 U.S. midterm elections resulted in a "blue tsunami" as Democrats gained seats in both legislative chambers. Seven Senate seats flipped to Democrats, bringing their total to approximately 54, with results in Mississippi and Louisiana still pending.
Democrats also gained 24 House seats, reaching an estimated total of about 245 seats. The party secured governorships in Georgia, Iowa, Nevada, Ohio, and Texas.
President Donald Trump, who remains in office for the final two years of his term, is described as a "proper lame duck" following the election results. This new Democratic-controlled government will not take effect until January 2027.
Market sentiment reacted to the political shift as the STOXX 600 in Europe and Britain's FTSE 100 both fell 1% on Friday after hitting a more-than-three-week low. The shift prompted a broad risk-off reaction due to concerns over artificial intelligence.
The VIX index, which measures market volatility, recorded a large spike on the day of a webinar discussing these developments. Presenters at the webinar discussed the Quant system and its QGNI signals for the year ahead, though they provided no specific data points.
Sensex and Nifty slip during Diwali Muhurat trading
The Sensex dropped 29 points to finish at 80,999 during Diwali Muhurat Trading on Sunday, November 8, 2026, ending a six-session winning streak. Diwali Muhurat Trading took place on Sunday, November 8, 2026.
The Nifty 50 index fell 44 points to end at 24,986, slipping below the psychological mark of 25,000. Out of 3,550 stocks traded on the National Stock Exchange (NSE), 2,716 shares advanced, 736 declined, and 98 remained unchanged.
Vinod Nair, Head of Research at Geojit Investments, said that after profit-booking, the near-term bias remains constructive.
Vodafone Idea led the volume of actively traded stocks with 7.54 crore shares, followed by Yes Bank with 4.69 crore shares. Other active stocks included Tata Teleservices, Suzlon Energy, Vedanta Power, Tata Steel, and Zee Entertainment Enterprises. Canara HSBC Life was among the stocks that hit 52-week lows on the NSE.
Investors are also weighing the future of artificial intelligence stocks as they enter the new trading week. Morningstar hosts Ivanna Hampton and Christine Benz provide weekly research on ETFs, portfolios, asset allocation, and risk management.
BlackRock evaluates AI earnings and hyperscaler spending
Investor scrutiny of artificial intelligence is intensifying this earnings season, and results are key to BlackRock’s broader conviction in the AI transformation. Four years of booming investment have pushed earnings expectations higher, and investors now demand evidence that spending delivers returns. Rising capital expenditures are squeezing free-cash-flow into negative territory for some firms.
Cloud-revenue growth at Microsoft and Alphabet points to sustained momentum in AI demand.
This supports its overweight position in emerging-market equities through exposure to bottlenecks in the AI build-out. Brazil’s post-election sell-off bears watching but does not change BlackRock’s EM overweight stance.
Nasdaq records fourth consecutive weekly decline
Technology stocks rebounded on Friday after a year-long slump, while the Nasdaq Composite Index recorded its fourth consecutive weekly decline. The Nasdaq closed the session up 1.1% after reaching as high as a 2% gain during the day.
This trend pushes bond yields to structurally higher levels.
Upcoming economic data and corporate earnings focus
Investors are monitoring October non-farm payrolls for signs of a tightening labour market, according to BlackRock.
The podcast covers key takeaways for investors following the October Federal Reserve meeting.
The hosts discuss upcoming earnings reports for Arm Holdings, Clorox, Palantir, and Apple. They also provide considerations for investors regarding recent earnings reports from L3 Harris, Amazon, and Microsoft.
The podcast examines whether Amphenol, Alphabet, or Microsoft appear attractive to investors following their respective earnings reports. The episode includes an analysis of the post-earnings selloff of Alphabet stock.
The hosts discuss the common qualities of core stock holdings and how investors should manage these positions within a portfolio. The episode concludes with a list of three stocks to buy and three stocks to sell for the month of November.
Historical context of US divided government
Divided government, where the presidency and at least one chamber of Congress are controlled by different parties, is the rule rather than the exception in U.S. history, according to Seeking Alpha. Historical examples include Ronald Reagan’s presidency with a Democratic House and Bill Clinton’s term with opposition-controlled chambers.
The Obama era also featured divided government, followed by the 2010 Tea Party surge, the 2011 debt-limit crisis, an S&P 500 downgrade, and a 16-day government shutdown. During Donald Trump’s presidency, divided government led to multiple impeachments, investigations, and a couple of government shutdowns.
Morningstar has increased its fair value estimates for both SpaceX and Tesla.
Frequently Asked Questions
- Here are the 2 big things we're watching in the stock market in the week ahead (cnbc.com)
- Ahead of Market: 10 things that will decide stock market action on Monday - The Economic Times (m.economictimes.com)
- Weekly market commentary | BlackRock Investment Institute (blackrock.com)
- From Ballots to Markets: What the Midterms Mean for Stocks | Seeking Alpha (seekingalpha.com)
- 3 Stocks to Sell and 3 Stocks to Buy for November | Morningstar (morningstar.com)
- What to do with your retirement savings in a stock market sell-off (finance.yahoo.com)
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