The Democratic Party's decisive victory in the midterm elections sent shockwaves through Wall Street, reshaping investor expectations across multiple sectors. The biggest impact was felt in AI stocks, which tumbled on fears that a Democratic-controlled Congress could slow down the rapid expansion of data centers, particularly in Texas. Companies like Nvidia and Lam Research saw sharp swings, while hyperscalers such as Amazon held up better.
Defense and oil companies also took a hit, as investors anticipated a potential end to the U.S.-Iran war, which would likely reduce demand for military equipment and lower energy prices. Shares of Northrop Grumman, Lockheed Martin, RTX, and General Dynamics dropped between 4% and 12%, while Exxon Mobil and Phillips 66 saw declines despite strong year-to-date gains.
Elon Musk's companies, Tesla and SpaceX, faced significant losses, with Tesla falling 10.1% and SpaceX down 5% on concerns over potential investigations into Musk's role as Trump's cost-cutting chief in 2025. Meanwhile, Trump Media & Technology lost 33% of its market value in just three days, with the company's stake plummeting from nearly $5 billion in March 2025 to less than $600 million.
On the upside, hospital shares rose on hopes of restored or increased funding for programs like Medicaid and the Affordable Care Act. HCA Healthcare, Tenet Healthcare, and Universal Health Services all saw gains. Homebuilders and alcohol companies also benefited, with D.R. Horton, PulteGroup, Home Depot, Constellation Brands, and Brown-Forman all posting increases on expectations of policy shifts that could lower costs and boost sales.