Friday Closing Prices
S&P 500 7,376 (+0.31%)
Nasdaq 24,579 (+1.09%)
Gold $4,069 (-0.43%)
Brent Crude Oil $97.69 (-1.44%)
Tuesday’s US midterm election results rippled through markets this week, with a Democratic sweep of both chambers of Congress triggering a sharp repricing across equities, commodities, and rates 1 . Fears of tighter regulation of the AI buildout hit technology stocks hardest, with the Nasdaq 100 falling 6.4% on Thursday and wiping a whopping $2.3tn from market capitalisation 2 . The broad Semiconductor index plunged more than 12%, while the VIX surged 39% 2 . Friday’s partial rebound offered some relief, although the S&P 500 still recorded its fourth consecutive weekly decline, falling 2.7% 2 .
Oil suffered an equally dramatic reversal. WTI, trading near $104 a barrel the previous week, collapsed as markets priced a greater likelihood of Middle East de-escalation following the election 2 . Brent fell over 8% on Wednesday 2 .
Meanwhile, economic data and Fed commentary reinforced the prospect of further monetary tightening. October payrolls rose 165,000, comfortably exceeding expectations of 65,000 10 , while the unemployment rate fell to 4.1% 3 . Fed officials maintained a broadly hawkish tone, with markets now pricing 19bps of tightening at December’s meeting 2 .
A Political Reckoning
The Democratic Party captured the needed Senate seats to take control, flipping seven Republican-held seats 1 . This included traditional Republican strongholds such as Texas, Kansas, and South Carolina, while gaining more than 40 House districts 1 .
The move lower in stocks reflects the worry of greater scrutiny of AI infrastructure, particularly data-centre development and energy consumption 4,11 . This threatens to complicate an investment cycle already facing questions over financing and returns, hence the wobble.
Another implication traders are still digesting is a substantial weakening of Trump's legislative authority 1 . Democratic control introduces greater obstacles to tax reform and fiscal expansion. The risk of budget standoffs also rises, potentially complicating Treasury issuance and fiscal negotiations.
The sharpness of the moves seen even to end the week in stocks, oil and commodities may not have run its course, so the week ahead could bring more volatility for traders to contend with.
The Fed May Not Be Finished
Amidst all of the disorderly price action following the election, chatter from Federal Reserve officials flew under the radar.
However, those who spoke maintained a hawkish tone this week, reinforcing expectations of further interest rate hikes. San Francisco Fed President Daly suggested additional hikes would be necessary, while Cleveland’s Hammack favoured a gradual tightening cycle to prevent inflation expectations becoming entrenched 5,6 . Musalem highlighted inflationary pressures stemming from AI infrastructure investment and Middle East supply disruptions 7 .
Friday’s October employment report strengthened their case. As we mentioned in the introduction, the Nonfarm payrolls were very strong, showing a resilient labour market. Such resilience gives policymakers greater latitude to prioritise trying to tackle inflation, leaving the hurdle for pausing the tightening cycle relatively high.
The Next Inflation Test
Tuesday’s US inflation report will provide the next major test for markets, particularly following Friday’s stronger-than-expected payrolls print and increasingly hawkish Fed commentary. Headline Consumer Price Index (CPI) rose 0.6% MoM in September, taking annual inflation to 3.7%, while core prices increased 0.3% MoM, leaving underlying inflation at 2.6% YoY 8 .
Expectations point to some moderation in October, with headline inflation forecast to rise 0.4% MoM and core CPI by 0.3% 9 . Attention will centre on whether recent energy price pressures have begun feeding into broader inflation.
For markets, the balance of risks remains uncomfortable. A softer print could provide relief to Treasuries and equities following a volatile week, although resilient employment limits the scope for a sustained dovish repricing. Conversely, another upside surprise would strengthen the case for a December hike. It would also put equity valuations under even more strain.
Sources:
1. https://apnews.com/article/ef6199e25927a9ac9f4c18eae0e497cd
2. Bloomberg terminal pricing (NDX, CCMP, VIX, SPX, SOX, CL1, CO1, XAU, US OIS)
3. Table B-1. Employees on nonfarm payrolls by industry sector and selected industry detail – 2026 M10 Results U.S.
Bureau of Labor Statistics – The Employment Situation, October 2026 (Tables A-1 and B-1)
4. https://news.bloomberglaw.com/daily-tax-report-state/chip-stocks-sink-as-traders-rotate-into-old-economy-stocks
5. https://www.reuters.com/business/daly-says-fed-rate-hike-likely-despite-painful-tech-stock-dive-2026-11-06
6. Fed's Hammack, Barkin favor gradual rate-hike path to lower inflation | Reuters
7. https://news.bloomberglaw.com/banking-law/feds-musalem-says-high-inflation-fueled-by-supply-shocks-and-ai
8. U.S. Bureau of Labor Statistics – Consumer Price Index, September 2026
9. Bloomberg L.P. – Economic Calendar, W/C 9 November 2026
10. Strong October jobs report sends yields higher
11. How Democrats’ midterm gains could reshape the political landscape for AI
Disclaimer: This material is issued for general information and educational purposes only. Any views expressed are those of the author, presenter or contributor, and may change without notice, and do not necessarily reflect the views of Lunaro. This material does not take into account your personal objectives, financial situation or needs, and should not be relied upon when making investment decisions. Nothing in this material, whether or not it states any opinions, constitutes investment advice, investment research, a personal recommendation, or an offer or solicitation to buy or sell any financial instrument or trading service. While reasonable care has been taken in preparing this material, Lunaro makes no representation or warranty as to its accuracy or completeness and, to the extent permitted by applicable law and regulation, accepts no liability for any loss or damage, including loss of profit, whether direct or indirect, arising from the use of or reliance on it. Past performance is not a reliable indicator of future results. Recipients should seek independent professional advice before acting on any information in this material. This material is not intended for distribution to, or use by, any person in any jurisdiction where such distribution or use would be
contrary to local law or regulation. Lunaro Markets Limited is authorised and regulated by the Financial Services Regulatory Authority (FSRA) in the Abu Dhabi Global Market (ADGM) under Financial Services Permission No. 200034, and is registered in the ADGM under No. 000005466. Risk Warning: Trading leveraged products is complex and carries a high risk of losing money rapidly. Most Retail Clients lose money when trading OTC Leveraged Products. Before trading, ensure you understand the risks involved, read our Risk Disclosure Statement, and consider whether you can afford to take the high risk of losing your money. https://lunaro.com/disclaimer/ Confidentiality Notice: This email and any attachments are confidential and intended solely for the addressee. The contents must not be copied, disclosed or distributed to any other person without the
