Post-Election US Stock Selloff Defies Wall Street Trading Desks’ Expectations
2026-11-06 · 3 min read · AlphaGBM
At a glance
According to the report, trading teams at JPMorgan, Citadel Securities and UBS Securities had expected the US midterm election to act as a “clearing event” that would ease market anxiety, with cash on the sidelines potentially encouraging investors to rebuild positions. Instead, US stocks fell sharply on Thursday after rising Wednesday. The report placed the decline in the context of Democrats sweeping both chambers of Congress and heightened concern over the AI trade. The Nasdaq 100 lost $2.3 trillion in market value, while the S&P 500 dropped 4.4%, with every sector finishing lower. John Flood, Goldman Sachs’ head of Americas equities execution services, said Wednesday had been one of the busiest trading days of the year for the firm’s equities operation, but that Thursday brought a flood of client inquiries without much buying interest. He also said long-only funds had returned to the sidelines. Investors who cut risk exposure substantially before the midterms had been drawn back by Wednesday’s rebound, while hedge funds subsequently sold some hyperscale cloud-service stocks purchased during the previous session. The report cautioned that a single day does not establish a trend and that the desks’ bullish view could still ultimately prove correct.
Summary
According to the report, trading teams at JPMorgan, Citadel Securities and UBS Securities had expected the US midterm election to act as a “clearing event” that would ease market anxiety, with cash on the sidelines potentially encouraging investors to rebuild positions. Instead, US stocks fell sharply on Thursday after rising Wednesday. The report placed the decline in the context of Democrats sweeping both chambers of Congress and heightened concern over the AI trade. The Nasdaq 100 lost $2.3 trillion in market value, while the S&P 500 dropped 4.4%, with every sector finishing lower. John Flood, Goldman Sachs’ head of Americas equities execution services, said Wednesday had been one of the busiest trading days of the year for the firm’s equities operation, but that Thursday brought a flood of client inquiries without much buying interest. He also said long-only funds had returned to the sidelines. Investors who cut risk exposure substantially before the midterms had been drawn back by Wednesday’s rebound, while hedge funds subsequently sold some hyperscale cloud-service stocks purchased during the previous session. The report cautioned that a single day does not establish a trend and that the desks’ bullish view could still ultimately prove correct.