Why the Nasdaq Cracked After Wall Street’s Midterm Rally

Fundies Focus

One day after stocks cheered a Democratic midterm sweep, the Nasdaq 100 and S&P 500 sold off hard. Chip shares led and Treasury yields fell. Thursday’s tape shows how the same election story can flip from “good for risk” to “bad for AI” overnight.

In short: Two stories competed, and the AI one won on Thursday. Soft chip guidance after the Wednesday close gave traders a fuse. Fears that Democratic wins could slow data-center builds gave them fuel. Falling yields show this was not a classic rates scare.

What Is the Nasdaq 100, and Why Did It Fall Harder Than the S&P 500?

The Nasdaq 100 is a stock index (a basket of stocks tracked as one number) made up of 100 of the largest non-financial companies listed on the Nasdaq exchange. Chip and big-tech names carry more weight there than in the S&P 500, so it often moves further when those shares crack. House prices in this piece use the Nasdaq 100 CFD and the S&P 500 CFD, the same feeds as other BabyPips article types.

By about 2:15 p.m. ET (19:15 GMT) on Thursday, Nov. 5, the Nasdaq 100 CFD sat near 26,955 (−5.6%) and the S&P 500 CFD near 7,407 (−3.9%), according to TradingView. The PHLX Semiconductor Index (SOX) was down about 10.4% as supporting chip-sector evidence. Semiconductors led, the Nasdaq followed, and the S&P still felt it.

How Can Competing Narratives Flip the Same Election in One Session?

A market narrative is the shared story traders use to explain price. Wednesday’s story leaned on gridlock and a crash in oil after Vice President JD Vance tied the midterm loss to the Iran war. BabyPips’ Nov. 4 Daily Market Recap had the S&P 500 finishing about 1.4% higher and WTI down about 8.5%. Our midterms headline covered the election scorecard and the dollar’s early slip.

Thursday’s story was different. NBC News and Business Insider framed the selloff around AI and data-center politics: Democratic wins raised fears that permits and power rules could slow the buildout that has powered chip demand. The 10-year Treasury yield was near 4.83%, lower on the day, and WTI futures were up about 2.4% near $90.25. Stocks fell while yields fell and oil rose, so this was not a classic rates scare or oil shock.

The core pattern: competing narratives. Traders often hold more than one explanation for the same macro event, and the next print can pick a winner. After the Wednesday close, Qualcomm slightly beat earnings estimates but issued light first-quarter guidance, and handset chip sales missed, CNBC reported. Arm beat results, yet the outlook failed to look like a blowout. That earnings fuse gave the AI-risk story room to run while midterm relief faded.

Two other patterns show up here: index concentration can turn a sector story into an index story, and guidance can outweigh a beat. Premium covers both.

So why did the Nasdaq crack after the midterm rally? By early afternoon Thursday the Nasdaq 100 CFD was still down about 5.6%, with SOX off about 10% as supporting chip evidence. Friday’s U.S. jobs report at 13:30 GMT is the next scheduled fact that can calm the AI scare or feed a broader risk-off read.

For Premium readers: the full Thursday driver stack, the S&P 500 and Nasdaq 100 CFD chart read, and the bounce-or-extend map into Friday’s NFP continue below.