Musk’s two firms shed $126 billion in one session

The latest:

Tesla and SpaceX shed $126 billion of combined market value in a single Wednesday session, with SpaceX down 3.8% and Tesla down 3.3%, its worst day in more than a month. The slide followed a Democratic sweep of both chambers of Congress that included a statewide win in Texas, home to both companies and a state Elon Musk had spent heavily to keep Republican.

Details:

• The Musk bet: Musk spent close to half a billion dollars supporting Republican candidates ahead of the midterms, including an effort to preserve Republican control of Texas. The state is the home base of both Tesla and SpaceX, and the scale of the spending made the result a direct financial setback for him.
• The Texas result: Democrats took a statewide race in Texas for the first time since 1994, breaking roughly 38 years of Republican dominance. The party also captured both the Senate and the House, winning in Republican strongholds that had not flipped in generations, in what was read as a public backlash against President Donald Trump.
• Apple’s record: Apple rose 5% to a record close, lifting its market capitalization past $5 trillion and back above Nvidia, which slipped to $4.8 trillion. Apple had first overtaken Nvidia in late July and regained the lead again late last week as chipmaker shares fell.
• Apple’s cost move: The jump came after reports that Apple cut the budgets allocated for employees’ use of artificial intelligence tools as part of a broader effort to reduce spending. The company did not set out the size of the reductions or the period they cover.
• The indexes: The Dow Jones surged 3%, or 1,569 points, its biggest daily gain in 19 months. The S&P 500 added 1.6% for its best day in three months, and the Nasdaq Composite rose 1.4%, its strongest session in a month and a half.
• Risk appetite: Wall Street’s fear gauge dropped 20%, the sharpest single-day fall since April 2025, as the election outcome removed a layer of political uncertainty and pushed investors toward risk.
• Chips diverge: The Philadelphia Semiconductor Index fell 3% to a six-month low. Cash-rich large-cap technology names rose on expectations that slower AI infrastructure growth would strengthen their competitive position, while chipmakers and data-center operators dropped.
• Data-center backlash: Data-center shares were hit after Democrats made gains in states central to the sector, including Texas and Georgia, where local opposition to its rapid expansion is growing. Smaller firms building parts of the AI buildout fell on concern a slowdown would strain their finances.
• Oil factor: A sharp drop in oil prices added to the broad rally, driven by bets that the shift in the balance of power in Washington would accelerate an end to the Iran war.

Between the lines:

The session split the technology trade in two. Investors rewarded companies that can fund themselves through a slower AI buildout, as Apple’s record close showed, and punished the chipmakers and data-center operators exposed to tighter regulation. Some market watchers traced part of the rally to optimism about an end to the Iran war, alongside other factors.

What’s next

Watch whether the semiconductor index extends its six-month low, how incoming Democratic majorities approach AI regulation in Texas and Georgia, and whether Apple holds its $5 trillion valuation against Nvidia’s $4.8 trillion.

Source:

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Headline:

Musk’s two firms shed $126 billion in one session

Summary:

The latest:

Tesla and SpaceX shed $126 billion of combined market value in a single Wednesday session, with SpaceX down 3.8% and Tesla down 3.3%, its worst day in more than a month. The slide followed a Democratic sweep of both chambers of Congress that included a statewide win in Texas, home to both companies and a state Elon Musk had spent heavily to keep Republican.

Details:

• The Musk bet: Musk spent close to half a billion dollars supporting Republican candidates ahead of the midterms, including an effort to preserve Republican control of Texas. The state is the home base of both Tesla and SpaceX, and the scale of the spending made the result a direct financial setback for him.
• The Texas result: Democrats took a statewide race in Texas for the first time since 1994, breaking roughly 38 years of Republican dominance. The party also captured both the Senate and the House, winning in Republican strongholds that had not flipped in generations, in what was read as a public backlash against President Donald Trump.
• Apple’s record: Apple rose 5% to a record close, lifting its market capitalization past $5 trillion and back above Nvidia, which slipped to $4.8 trillion. Apple had first overtaken Nvidia in late July and regained the lead again late last week as chipmaker shares fell.
• Apple’s cost move: The jump came after reports that Apple cut the budgets allocated for employees’ use of artificial intelligence tools as part of a broader effort to reduce spending. The company did not set out the size of the reductions or the period they cover.
• The indexes: The Dow Jones surged 3%, or 1,569 points, its biggest daily gain in 19 months. The S&P 500 added 1.6% for its best day in three months, and the Nasdaq Composite rose 1.4%, its strongest session in a month and a half.
• Risk appetite: Wall Street’s fear gauge dropped 20%, the sharpest single-day fall since April 2025, as the election outcome removed a layer of political uncertainty and pushed investors toward risk.
• Chips diverge: The Philadelphia Semiconductor Index fell 3% to a six-month low. Cash-rich large-cap technology names rose on expectations that slower AI infrastructure growth would strengthen their competitive position, while chipmakers and data-center operators dropped.
• Data-center backlash: Data-center shares were hit after Democrats made gains in states central to the sector, including Texas and Georgia, where local opposition to its rapid expansion is growing. Smaller firms building parts of the AI buildout fell on concern a slowdown would strain their finances.
• Oil factor: A sharp drop in oil prices added to the broad rally, driven by bets that the shift in the balance of power in Washington would accelerate an end to the Iran war.

Between the lines:

The session split the technology trade in two. Investors rewarded companies that can fund themselves through a slower AI buildout, as Apple’s record close showed, and punished the chipmakers and data-center operators exposed to tighter regulation. Some market watchers traced part of the rally to optimism about an end to the Iran war, alongside other factors.

What’s next

Watch whether the semiconductor index extends its six-month low, how incoming Democratic majorities approach AI regulation in Texas and Georgia, and whether Apple holds its $5 trillion valuation against Nvidia’s $4.8 trillion.

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