Market Recap & Outlook: Your Weekly Market Compass – November 6, 2026

An Election Rally Gives Way to an AI Selloff

The week's biggest move came in AI stocks. After a broad rally on Wednesday following the midterm elections, the S&P 500 fell 4.4% and the Nasdaq 5.5% on Thursday, led by companies tied to the buildout of AI data centers. Investors worried that tighter rules after the election could slow data center construction, and many took profits after a long run. Nvidia fell 9.3% on Thursday, and the Nasdaq closed in correction territory, more than 10% below its high.

The selloff reversed a broad rally the day before. Democrats won majorities in both the House and the Senate, according to Associated Press tallies, ending single-party control of Washington. On Wednesday the Dow rose 1,569 points, or 3.0%, and the S&P 500 gained 1.6%, led by hospital operators and retailers serving lower-income households, while defense and energy stocks fell. Chip stocks lagged even then. On Friday, AI stocks recovered part of their losses, with Nvidia up 3.6%, and the S&P 500 ended the week 5.3% below its all-time high.

This issue closes our series on the midterm elections. Over the past month we noted that, according to J.P. Morgan Asset Management, the S&P 500 has risen in the 12 months after every midterm election since 1950, by about 15% on average, and that the resolution of uncertainty has tended to matter more than the outcome. This week was a reminder that the path can be volatile even when the pattern holds. Divided government changes the outlook for some policies, including AI regulation, but over time earnings, interest rates, and valuations have driven returns far more than the balance of power in Congress.

Related: Navigating Historic S&P 500 Valuations

Earnings Stay Strong Beneath the Volatility

Company results remained strong even as stock prices swung. As of FactSet's October 30 update, with 60% of S&P 500 companies reporting, 82% had beaten earnings estimates, and blended third quarter earnings growth stood at 30.2%, up from 29.5% a week earlier. Revenue growth was 13.4%. The selloff this week reflected concern about policy and valuations in AI stocks rather than a weakening in reported profits.

Results from AI companies continued to show heavy demand. AMD reported third quarter revenue of $13.4 billion, up 45% from a year earlier, with data center revenue up 97% to a record $8.5 billion, and guided to about $17 billion for the fourth quarter. Palantir's revenue grew 96% to $2.31 billion, with U.S. commercial revenue up 148%, and the company raised its full-year outlook. Outside technology, Airbnb rose 11.7% on Friday after results that beat expectations, while Axon fell 18.2% after missing forecasts and lowering guidance.

The contrast between strong results and falling share prices reflects how much optimism was already in AI stock prices. Investors are weighing not only how fast these companies grow, but also how policy, financing costs, and competition could shape the returns on hundreds of billions of dollars of spending.

Hiring Rebounds as Factories and Consumers Firm

The labor market proved stronger than expected. The Bureau of Labor Statistics reported that employers added 165,000 jobs in October, well above the roughly 60,000 economists expected, and the unemployment rate edged down to 4.1% from 4.2%. September's gain was revised up to 60,000 from 29,000, and August's to 186,000. Average hourly earnings rose 3.1% from a year earlier.

Other reports pointed in the same direction. The ISM manufacturing index rose to 55.5 in October from 54.5, its prices index stood at 75.2, and the ISM services index eased to 54.5 from 54.9, both well above the 50 level that separates expansion from contraction. The University of Michigan's preliminary November consumer sentiment index rose to 51.0 from 48.0, and year-ahead inflation expectations fell to 4.3% from 4.7%.

Together with last week's 3.4% third quarter growth estimate, the data describe an economy that is expanding at a solid pace while inflation runs above the Fed's target. That combination supports the case for another rate increase, which is why the jobs report lifted Treasury yields on Friday.

Yields Ease for the Week as Hike Odds Climb

Treasury yields fell for a second straight week even as rate-hike expectations rose. The 10-year yield ended Friday at 4.86%, down from 4.93% a week earlier, and the 2-year yield fell to about 4.5% from 4.59%. Yields dropped Wednesday and Thursday as oil prices fell and investors sought safety, then rose Friday after the jobs report. According to the CME FedWatch Tool, the probability of a hike at the December 9 meeting rose to about 77% after the report.

The Federal Reserve's target range remains 3.75% to 4.00% after last week's hold, and September PCE inflation of 3.6% remains the latest reading of the Fed's preferred gauge. Cleveland Fed President Beth Hammack, one of the two officials who voted for a hike last week, said in a speech on Thursday that policy will need to become restrictive to bring inflation back to 2% and that she favors smaller, more frequent adjustments.

The Treasury's quarterly refunding announcement on Wednesday was largely in line with expectations. It will sell $125 billion of 3-year, 10-year, and 30-year securities next week and expects to keep coupon auction sizes unchanged for the next several quarters, although its revised guidance left room for increases later.

Oil Falls More Than 13% as Iran Talks Resume

Oil prices fell sharply as markets weighed the chance of an end to the war with Iran. Brent crude settled at $98.32 a barrel on Friday, down more than 13% from near $113 a week earlier, and West Texas Intermediate ended at $90.83, down 12.7%. Most of the decline came Wednesday, when Brent fell 8.7% to $94.62, its lowest level in two months, on expectations that the election result would add pressure to wind down the conflict.

The news from the region remained mixed. U.S. officials confirmed limited strikes on Iran's Qeshm Island on November 2, which they described as defensive. Negotiations resumed through mediators including Qatar and Pakistan, following Iran's proposal to reopen the Strait of Hormuz within two days if the United States meets its conditions, but no agreement was announced. On Thursday, the President said that with the election over, a decision on Iran would now be made, and Iran said three more ships had been struck in the strait. Brent recovered toward $98 late in the week as hopes for a quick deal faded.

Lower crude prices are reaching consumers. AAA reported a national average gasoline price of $4.10 a gallon on November 5, down 12 cents in a week. OPEC+ kept its December production targets unchanged and will meet again on November 29.

Growth Stocks Lead the Decline as Value and Gold Hold Up

Growth stocks bore the brunt of the AI selloff. Large-cap growth fell 5.0% and mid-cap growth 5.8%, while large-cap value slipped only 0.5%, leaving large-cap value up 23.9% this year against a 5.1% loss for large-cap growth. The S&P 500 fell 2.7% and small caps 2.0%. Developed international markets fell 1.8% and emerging markets 4.1%. Bonds rose as yields fell, with municipal bonds up 0.8%, long-term Treasuries up 0.5%, and the Aggregate and high-yield corporate bonds each up 0.4%. Gold gained 4.7%, real estate rose 2.0%, the dollar rose 0.4%, and Bitcoin fell 2.4%.

Bitcoin weekly return from Bloomberg closing levels of $76,005.51 on November 6, 2026 and $77,838.81 on October 30, 2026. Bitcoin year-to-date return calculated by Vistamark from the November 6, 2026 close and the January 1, 2026 reference price of $88,722. All other figures are total returns through the November 6, 2026 close, sourced from Vistamark Bloomberg internal data systems.

Inflation Data, Bond Auctions, and AI Earnings

The coming week brings the October consumer price index, a holiday-shortened week for the bond market, and earnings from several companies tied to AI spending, with the Iran talks still unresolved.