Midterms AI sell off

Markets have been volatile in the last week as investors have digested the news of the historic midterm election results and the implications for AI spending. Markets initially responded positively to the results of the midterm elections in which the Democrats took control of both the House of Representatives and the Senate. However, yesterday saw a reversal with the technology stocks in the US falling sharply, with the S&P500 falling over 4% as investors reassessed the impact of the pushback against data centre build out on AI related stocks.

What this means for portfolios

Whilst there has been extremely high volatility in individual stocks, this has been mostly limited to AI related sectors such as semiconductors. So, whilst the Nasdaq has fallen around 15% from its peak in early October, the FTSE 100 is up over the same period and down around 1% so far in November as we write. We have been highlighting to investors the importance of a diversified equity exposure as global equity indices have become more concentrated.

In addition, multi-asset investors have benefitted from rising fixed income markets over the past month, providing diversification and offsets within portfolios which have helped to limit volatility. Looking ahead, we continue to believe that diversification within equities as well as across asset classes remains vital in this rapidly evolving world.

What does this mean for your financial plan?

Your financial plan is built around your long-term goals, rather than short-term movements in markets. Periods of volatility are an expected part of investing and will have been considered when your investment strategy was put in place. What matters most is whether anything has changed in your circumstances, objectives, or future plans. If not, short-term market movements do not necessarily require a change in approach.

Final thoughts

Market conditions can change quickly after events like this and volatility can cause concerns for investors, so we will of course continue to monitor developments closely and keep you updated on what they mean for your portfolios and the wider markets.

If you have any questions or concerns about your investments or your future plans, don’t hesitate to get in touch with your TPO Adviser or contact us through our website.

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This information in this article is correct as at 06/11/2026.

This market update is for general information only, does not constitute individual advice and should not be used to inform financial decisions. Investment returns are not guaranteed, and you may get back less than originally invested; past performance is not a guide to future returns.