NEW YORK — The Democrats’ landslide victory in the midterm elections shook Wall Street this week.
The biggest shocks were felt in corporate stocks linked to the boom in artificial intelligence on fears that a Democratic Congress would curb further data center development.
Defense and oil companies fell on hopes that Democrats would push to end the U.S.-Iran war, which would likely lead to lower energy prices.
Meanwhile, hospital stocks rose on the possibility that funding for several government programs could be restored or increased, while liquor companies and others rattled by tariffs rose on hopes of relief.
Here’s a look at how some stocks and sectors reacted to the midterm election results.
AI Actions
The rampant construction of data centers to fuel the AI boom has generated huge profits for a wide range of companies: chipmakers, electricity providers, cooling system producers, cloud computing companies and many more. Investors hungry for a piece of those profits plunged, sending some stocks up double or more. But concerns have grown that AI stocks have become too expensive. And then the Democrats won the midterm elections to take control of Congress.
Nvidia, Lam Research and other players linked to the AI boom have flipped this week amid concerns about Democratic victories in states across the country. this could mean a slowdown in constructionespecially in Texas. Hyperscalers, or those that finance construction, like Amazon, are doing better.
Defense
Defense companies have been volatile throughout the year, rising and falling with market changes. American war against Iran. Hopes for an end to the war increased after the Democrats won the midterms. The end of the war could mean a drop in business for several major defense companies, although the war has also depleted weapons stockpiles, which could lead to a demand for resupply from the U.S. government.
Northrop Grumman, Lockheed Martin, RTX and General Dynamics fell between 4% and 12% after Tuesday.
Oil and refining companies
Oil exploration and refining companies have been among the biggest beneficiaries of the U.S. war on Iran, which has choked global supplies since February and increased the price of crude oil and gasoline. Several major energy companies lost ground after the midterm elections because an end to the war would lead to lower oil prices and reduced corporate profits.
Companies such as Exxon Mobil and Phillips 66 are still posting strong year-to-date gains.
Elon Musk’s companies
Elon Musk has spent more than $445 million trying to help Republicans maintain control of Congress. Not only was it its return on investment not very goodbut shares of his two publicly traded companies have been hammered by fears that the Democratic Congress will investigate Musk’s work as Trump’s cost-cutting chief in 2025. SpaceX, which houses Musk’s xAI business, and Tesla, which plans a fleet of mostly autonomous vehicles, fell 5% and 10.1%, respectively, after the midterms.
Trump Media
The president’s social media company, Trump Media & Technology, lost 33% of its market value in the three days following the election. Trump’s stake in the company was worth nearly $5 billion in March 2025. Today, it is worth less than $600 million. The company hopes to improve its fortunes by merging with nuclear fusion company TAE Technologies. Transaction finalization is pending.
Electricity companies
Companies that focus on wind, solar and other forms of renewable energy could see sunnier days thanks to a more industry-friendly Congress. Democrats will have overwhelming influence over funding when they take control of Congress in January, raising hopes for a wide range of green energy companies.
Companies involved in powering the data centers at the heart of AI development haven’t fared as well, however, after a number of data center skeptics were elected to Congress or governorships.
Hospitals
Hospitals gained ground on hopes that funding for several government programs could be restored or increased, including Medicaid and grants for the Affordable Care Act. Medicaid spending was cut under Trump. Enhanced tax credits for the ACA were allowed to expire without being renewed, leading to lower enrollment in insurance coverage nationwide. Increased funding for these programs would ultimately result in a boost for health care providers, including hospitals.
HCA Healthcare rose 6.9%, Tenet Healthcare rose 6.2% and Universal Health Services rose 10.4% after Tuesday.
Home Builders and Home Renovation
The housing sector, including builders, continues to face pressure from historically high house prices and mortgage rates. The shift in power in Congress could mean a greater focus on policies focused on affordability, a key theme for Democrats. Reducing energy tariffs and costs could reduce supply chain costs. It could also help home improvement retailers by easing pressure on consumers.
Mortgage rates, however, are a trickier issue for the sector. The Federal Reserve is expected to raise its benchmark interest rate again in an effort to curb inflation. This likely means interest rates on many types of loans, including mortgages, will remain high.
DR Horton gained 4.9%, PulteGroup rose 4.4% and Home Depot added 2.9%.
Alcohol
Beer, wine and spirits companies could benefit from relief from tariffs that have hurt sales in the United States and around the world, thanks to Democrats’ takeover of Congress. The hope is that they will take steps to end global tariff conflict this drove up prices. S&P 500 member Constellation Brands, which owns U.S. import rights for Corona and Modelo beers, and Brown-Forman, which makes Jack Daniel’s and other liquors, both posted gains.
Household items
Manufacturers and sellers of consumer staples gained ground as investors retreated from riskier sectors. They were also helped by hopes that a change in control of Congress could result in policies that help curb inflation. Eliminating or reducing tariffs could help reduce costs for businesses. Ending the U.S.-Iran war could increase global oil supplies, lowering oil prices and the costs of shipping everything from food to clothing.
After the election, Costco Wholesale rose 3.4%, Procter & Gamble rose 2.1%, and Dollar General rose 2.5%.
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