US Stocks Crash as Election Fallout Hits Wall Street – Nasdaq Plunges 5.52%
US equity markets suffered heavy losses in trading yesterday as investors continued to digest the implications of the Democrats gaining control of Congress following the mid-term elections. Concerns over potentially tougher government regulation weighed heavily on sentiment, particularly in the technology sector, which led the market sharply lower. The Nasdaq plunged 5.52% to close at 24,315, while the broader S&P 500 dropped 4.36% to finish at 7,353. The Dow Jones also suffered significant losses, falling 3.44% to close at 51,523.
US Treasury yields moved sharply lower as investors sought the relative safety of government bonds following the equity market sell-off. The policy-sensitive 2-year Treasury yield dropped 12.2 basis points to close at 4.459%, while the benchmark 10-year yield declined 5.3 basis points to finish at 4.835%. Despite the significant move lower in yields, the US dollar managed to edge higher against the major currencies, with the Dollar Index gaining 0.10% to close at 101.59, as investors positioned themselves ahead of tonight’s key US employment figures.
Oil markets bounced strongly following the previous session’s heavy losses as fresh hostilities in the Middle East raised concerns that a potential peace agreement remains some way off. Brent crude surged 4.66% to close at $99.03 per barrel, moving back towards the psychologically important $100 level, while WTI crude gained 3.35% to finish at $91.07 per barrel. Gold also managed to gain ground in another volatile session, rising 0.57% to close at $4,088.39 an ounce, despite the modest strengthening in the US dollar.
Oil and the Middle East Remain the Major Focus for Markets
Oil prices and the conflict in the Middle East remain the major focus for markets in the current environment.The sharp turnaround in prices last night highlights just how sensitive energy markets remain to geopolitical developments. Earlier hopes that the Democrats’ sweeping victory in the US mid-term elections could accelerate peace negotiations had seen oil prices tumble, but renewed attacks on tankers and ongoing concerns over supply disruptions have quickly brought buyers back into the market.
Looking ahead, developments in the Middle East look set to dominate oil markets for the remainder of 2026, with traders facing two very different scenarios.
Any genuine progress towards a peace agreement between the US and Iran could see oil prices come under significant pressure as the geopolitical risk premium unwinds. However, further escalation, particularly around the Strait of Hormuz and key regional energy infrastructure, could quickly send prices back towards recent highs.
The implications extend well beyond energy markets. Oil prices will remain a major driver of inflation expectations, central bank policy outlooks, currency movements and global equity sentiment.
For traders, the message is clear. Economic data and central bank decisions will continue to move markets, but headlines from the Middle East could override them in a heartbeat. With less than two months left in the trading year, expect oil to remain one of the most volatile and closely watched markets right through to the final trading sessions of 2026.
Non-Farms Day to Finish Off a Busy Week
Attention now turns firmly towards the US employment market, with the highly anticipated Non-Farm Payrolls report (exp. +65k) due early in the New York session. The release will be accompanied by the latest unemployment rate (exp. 4.2%) and Average Hourly Earnings (exp. +0.3% m/m) figures, with traders looking for further clues on the strength of the US economy and the Federal Reserve’s likely policy direction at its December meeting.
A stronger-than-expected report could reinforce expectations of another 25-basis-point rate hike, supporting the dollar and potentially putting further pressure on equities. Conversely, weaker employment numbers could see Treasury yields and the dollar come under renewed pressure as markets reassess the likelihood of further monetary tightening.
Canadian employment (exp. +14.6k) figures will also be released alongside the US data, providing another potential catalyst for volatility in the Canadian dollar, while the Ivey PMI (exp. 57.7) figures will follow later in the session.
