Wall Street ended a choppy start to November lower on Monday, as another slide in technology shares outweighed relief from a sharp drop in oil prices. Investors now turn to Tuesday’s US midterm elections, which will decide whether Democrats can wrest control of Congress from President Donald Trump’s Republican Party.
A split session
The day began with gains but faded as tech sold off again. The S&P 500 slipped 0.51% to 7,541.40, and the Nasdaq dropped 1.07% to 25,164.32, while the Dow Jones Industrial Average rose 0.41% to 51,983.98. The split shows how narrow the damage has become. Energy-sensitive and defensive stocks held up, while chip and software names carried the losses.
Oil helped part of the market. Crude prices tumbled on optimism about a potential US-Iran peace agreement. Cheaper fuel eases pressure on consumers and on the inflation figures that the Federal Reserve is watching closely.
Single-stock swings
Individual stocks added to the unease. Apple closed down 1.5% ahead of its quarterly report, then traded close to flat after the numbers. Deal news dragged on the sector too. Marvell Technology announced a $115 billion all-stock agreement to buy Lumentum, sending Marvell shares down 13% and Lumentum down 18.59% on concerns about dilution and financing risk.
Cheaper, but not yet cheap
Despite the slide, the earnings backdrop is solid. Third-quarter earnings for S&P 500 companies are on track to climb more than 30% from a year earlier, with AI heavyweights accounting for much of the jump. That has pulled valuations lower. The index now trades at about 19 times expected earnings, its lowest forward valuation since 2023.
For investors, that is the central tension. Profits are strong, yet prices are falling because the market doubts how long the artificial intelligence spending cycle can continue. Losses in tech have shown few signs of slowing after an extended route in October.
Futures offer little conviction
Early signals for Tuesday were muted. S&P 500 futures rose 0.15% to 7,585.50, Nasdaq 100 futures gained 0.3% and Dow futures edged up 0.06%. S&P 500 e-mini futures later slipped 0.1% for a fourth consecutive day, while Japanese markets were closed for a holiday. The tone across Europe was weaker, with German DAX futures sliding 0.8% and FTSE futures 0.2% lower.
What the midterms could mean
Market strategists are careful not to overstate the political risk, but they are watching. A Republican loss in Congress would present more headwinds for Trump in enacting his agenda, and the president is expected to lean more on executive measures, which would raise regulatory uncertainty.
One scenario circulating among traders is more specific. A Democratic sweep, which the prediction market Kalshi favours, is seen as most likely to spark a selloff on the risk of AI regulation, from data centre curbs to rules on model development. A Republican hold, which polls suggest is unlikely, would keep the AI backdrop intact and could spark a rally in financials and industrials. Historically, such political swings tend to matter less than earnings and interest rates, but they can move sentiment over a few sessions.
The rest of the week
The calendar remains heavy. Earnings continue, with AMD among the major reports due, and attention then shifts to the Federal Reserve. The October jobs report arrives on November 6, and a US inflation reading is due on November 10. Both could shape expectations for another rate increase in December.
The bottom line
The market is caught between two stories. One says earnings growth and lower valuations make this a buying opportunity. The other says the AI trade has further to unwind, and politics and rates could amplify the move. Tuesday’s election results, and the market’s reaction on Wednesday, will show which story investors are choosing to believe.
Summary: The S&P 500 and Nasdaq closed lower on Monday as tech shares slid again, even as oil fell and the Dow gained. Investors now await US midterm results, with the S&P 500 trading at its lowest forward valuation since 2023.
