$2.8 trillion gone in a day, best rally since April, then a Fed hike threat: Wall Street's whiplash week

US stocks lost about $2.8 trillion in a single day last Thursday, won most of it back on Monday, and slipped again on Tuesday after a hot inflation report. The S&P 500 fell 4.4% on November 5, its worst day since April 2025, as investors bet that Democratic midterm wins would slow the AI data center boom, NBC News reported. On Monday the index jumped 2.35%, its best day since April 8, CNBC reported. On Tuesday it gave back 0.38% as traders priced in a Federal Reserve rate hike in December, Reuters reported.

The short version: the AI trade is no longer a one-way bet, and the Fed is now leaning toward raising rates, not cutting them. Both are bad news for anyone who bought tech at the top.

−6%

−4%

−2%

0%

2%

4%

Nov 5−4.4%

Nov 92.35%

Nov 10−0.38%

Nov 5Nov 9Nov 10

Source: NBC News, CNBC, Reuters via MarketScreener

Show the numbers

Day	S&P 500
Nov 5	−4.4%
Nov 9	2.35%
Nov 10	−0.38%

Thursday: the midterm shock#

The sell-off was about who won on November 3. Democrats took Congress, and hundreds of candidates who pledged to rein in AI data centers were elected, including Texas Gov.-elect Gina Hinojosa in the country's largest data center market, according to NBC News. Investors feared slower building, which would hit the chips, memory, power and cloud firms that have led the market.

The damage was steep.

Source: NBC News.

The Nasdaq 100 lost $2.3 trillion in value, and the chip index had its worst day since March 2020. Weak results from Qualcomm and Arm the night before lit the fuse. Qualcomm is also now cutting jobs, as we covered in our layoffs roundup.

President Trump blamed the other party. "The Stock Market suffered one of the Worst Days in History based on the results of the Election," he wrote on Truth Social, adding, "it wasn't Republicans, it was Dumocrats," as quoted by NBC. Many Democrats who won races for governor, attorney general, Senate and House seats have pledged to slow or halt data center construction, NBC reported, with Texas, Ohio, Michigan and Georgia of most concern to investors. Those are big promises aimed at what NBC called the primary driver of US economic growth.

Not everyone saw a bubble bursting. "I think it's an AI bubble losing some air very, very rapidly," said Ed Yardeni of Yardeni Research, who argued a slow leak lowers the risk of a crash that hurts the wider economy.

Monday: the best day since April#

Then buyers came back hard. The S&P 500 rose 173 points to 7,549.94. The Dow jumped 1,104 points to 52,389.75, and the Nasdaq gained 2.74%, per CNBC. The chip index climbed 6.9%, with Nvidia its only decliner, Reuters reported.

Falling oil helped. Brent crude fell 5.85% to $92.57 a barrel after President Trump said he was unlikely to order fresh attacks on Iran while talks continue. Adam Sarhan of 50 Park Investments told Reuters the buying came from short sellers covering bets, bargain hunters and momentum traders.

X tracked the rally in real time. Watcher.Guru posted that $1 trillion was added to US stocks at the open, a post that drew more than 10,000 likes.

View this post on X

The data account OddStats pointed out how rare the swing was. It noted the Nasdaq 100 fund QQQ was on track for a 3% gain within two days of a 6% loss while still up for the year, which it said would be only the third time ever. Swings that big in both directions usually come in unstable markets, which is why many traders read it as a warning, not a clean bottom.

View this post on X

On Reddit, r/wallstreetbets users had argued for weeks before the vote over whether to short the market into the midterms. These are online reactions, not a measure of what most investors did.

Tuesday: inflation and the Fed spoil the bounce#

The rally stalled on the October inflation report. Consumer prices rose 0.4% in the month, more than the 0.3% forecast, and Fed Governor Christopher Waller said the Fed should raise rates in December and consider a half-point move if inflation gets worse, Reuters reported. Futures markets moved to fully price in at least a quarter-point hike. The 2-year Treasury yield jumped nearly 0.2 percentage points.

The S&P 500 closed at 7,521.48 and the Nasdaq fell 0.74%. Nvidia dropped nearly 6%, bringing its two-day slide to about 10%, as the company runs an internal probe into spy claims linked to CEO Jensen Huang. Our economy report breaks down the inflation numbers and the Fed's turn toward hikes.

What this means for investors#

Three things now drive this market:

• Politics and AI. New state and federal leaders who want to slow data centers can hit chip and power stocks fast. Watch the first bills and permit fights.
• The Fed. A December hike is now the base case. Higher rates hit richly priced growth stocks the hardest.
• The Anthropic IPO. The AI lab hopes to price as early as November 18 at a value of up to $1.4 trillion. A strong debut would steady the AI trade; a weak one could restart the sell-off. Read our Anthropic IPO story for the numbers.

The S&P 500 was about 3.4% below its October record after Monday's close, per the Associated Press. That is a small gap for so much noise. The question is whether last week was a warning shot or the first leg of something bigger.

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