Dow Jones, Nasdaq, S&P 500 weekly preview: U.S. midterms, earnings to test markets Vahid Karaahmetovic Mon, November 2, 2026 at 9:15 AM EST 4 min read ^IXIC -2.86% ^DJI -1.09% ANTH.PVT US500 DJI Investing.com -- The Nasdaq Composite tumbled Friday while the Dow Jones Industrial Average held up better, as investors moved out of AI stocks and into more defensive corners of the market.
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The Nasdaq fell 2.86% to 25,437.00, its worst session since June, and sits roughly 8% below its recent high. The Dow dropped 572.25 points, or 1.09%, to 51,770.31, and the S&P 500 slid 1.82% to 7,580.07.
Intel plunged almost 29% after issuing a weak outlook for the current quarter, citing a slowdown in PCs. Chipmakers more broadly also came under pressure.
Sentiment was also dented by a Financial Times report, citing sources, that Blackstone told investors Anthropic may not receive an investment-grade rating after its debut. Anthropic's S-1 filing had briefly buoyed the AI trade earlier in the week, but pressure resumed as investors digested more tech earnings.
For October, the Nasdaq lost 5.3%, its steepest monthly drop since March 2025. The S&P 500 fell 0.9%, while the Dow gained 1.7%.
This week, midterm elections, a heavy slate of earnings, and the monthly jobs report will test investors after a string of setbacks for the AI trade.
Tuesday's vote will determine whether Democrats can take control of Congress from President Donald Trump's Republican Party. Democrats are widely expected to win the House, while the Senate is less certain.
Investors are bracing for more pushback on data centers, whose effect on energy costs and the environment has drawn intense public opposition. Few expect viable legislation to threaten AI investment whichever party wins, but a Democratic sweep would likely bring more scrutiny. Investors are also watching state and local races in Texas and elsewhere for implications for the data-center buildout.
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Defense and healthcare stocks could also be sensitive to the outcome, since any shift in Washington could change the outlook for fiscal spending. A Democratic sweep could bring more regulatory scrutiny of Wall Street banks and crypto firms.
Strong earnings have underpinned this year's equity gains. With more than half of S&P 500 companies having reported, third-quarter earnings were on pace to rise 31.6%, according to LSEG IBES data.
Apple reports Monday after the market close. AMD, Qualcomm and Palantir, which offers another read on the AI trade, are also due this week, as well as McDonald's, Amgen and ConocoPhillips.
Friday's October employment report will offer a critical read on the health of the U.S. economy.
JPMorgan: "The potential for a geopolitical re-escalation after mid-terms is elevated, which could lead to a bout of market weakness, and a fresh spike in oil price. If the re-start of the conflict does come through, we do not think it will be prolonged, it will likely end up as another dip to buy, like all geopolitics driven dips we saw since March. Nevertheless, as investor sentiment is already very fragile, the risk of renewed escalation remains a big wild card over the next few weeks, one way or the other."
Morgan Stanley: "We think the correction that began months ago is in its final phase, with the S&P 500 catching down as breadth improves, consistent with our call. We expect near-term clearing events to provide an attractive opportunity to add risk to quality cyclicals that have de-rated as we head into 2027."
Evercore ISI: "As an investor (Whose household ownership of equities is at all-time highs) free and fair elections are a part of the appeal of the U.S. as the world's premier destination for capital. There have been two elections this century, 2020 and 2000, where doubt was cast on the outcome. The Fed is likely to hike on 12/9, WTI is above $100/bbl., 2/10 is flattening while Hyperscalers need to raise capital to finance $1.3T in 2027 Capex. Capital markets strain, 4 Years into an aging Bull. Against this backdrop, stocks are likely to come under pressure if doubt is cast on the outcome(s)."
RBC Capital Markets: "U.S. equity investors have assumed policy risk is low coming out of the mid-terms. While the commitment to bipartisanship we heard in the Senate videos may very well end up being little more than empty campaign promises, or well-intentioned pledges that run into the hard realities of the legislative process in Washington and a Presidential veto, we've heard and seen enough to think investors need to monitor policy dynamics around several sectors going forward. Health Care, Tech, Consumer, Utilities, and Energy seem particularly at the intersection of some of these debates."
Dow Jones, Nasdaq, S&P 500 weekly preview: U.S. midterms, earnings to test markets
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