Democratic Sweep and AI Selloff Rattle U.S. Markets as Jobs Data Lifts Rate Bets

The election shift and uncertainty over returns on AI capital spending drove a technology-stock selloff, while stronger October payrolls raised expectations for a December Federal Reserve rate hike.

The Nasdaq fell 5.52% Thursday, and the Philadelphia Semiconductor Index dropped 12.2%. Nvidia fell more than 9%. Investors reassessed AI valuations amid concerns about tighter regulation of data centers and uncertain returns on heavy capital spending. AI-related shares rebounded Friday after President Donald Trump voiced full support for superintelligence.

Democrats won control of both the House and Senate. The party plans to increase oversight of the Trump administration and revisit tariffs, health care and war policy. The political shift also changed market expectations for regulation of AI data centers.

Technology companies raised or planned billions of dollars for infrastructure spending. Meta issued about $25.1 billion in bonds over two days, and Alphabet issued 6 billion euros in bonds. Apple planned to raise about $7 billion, while Oracle planned a $20 billion financing through debt and equity.

Employers added 165,000 jobs in October, above the 65,000 expected, and unemployment fell to 4.1%. Employment figures for the prior two months were revised up by a combined 84,000. The report pushed December rate-hike bets higher, with market pricing reaching about 80%.

Iran sent a nuclear proposal to the United States through Qatar and set seven conditions for further talks. They included lifting a port blockade, easing sanctions and releasing frozen assets. Trump said an agreement could be reached, while U.S. military operations continued and risks to the Strait of Hormuz remained unresolved.

The United States planned to host trilateral talks involving the United States, Russia and Ukraine in Abu Dhabi on Nov. 10-11. Russia confirmed it would attend, but fighting continued as the talks approached.