Commentary
Asian markets enter the first trading week of November amid growing uncertainty over technology valuations, artificial intelligence investment, and global economic conditions. Following a bruising final week of October, investors are hoping for a recovery. With the U.S. midterm elections approaching on Nov. 3, could November bring a technology rebound and a broader market relief rally, or is more turbulence ahead?
Asian Markets Open November: Can Markets Recover After October’s Technology Bloodbath?
As I write on Sunday night, Nov. 1, 2026 (ET), the end of daylight saving time has reshaped the global trading clock. The month begins against a turbulent backdrop. Wall Street ended October with a sharp technology-led sell-off, as investors questioned whether the massive capital spending on artificial intelligence infrastructure will ultimately deliver sufficient returns.
On Friday, Oct. 30, the Nasdaq Composite plunged by approximately 2.86 percent, while the S&P 500 fell by 1.82 percent and the Dow Jones Industrial Average declined b 1.09 percent. Technology and semiconductor shares were among the hardest hit. The sell-off reflected growing concerns about elevated valuations, the scale of AI-related spending, and whether the earnings growth expected by investors can justify the prices being paid for many technology stocks.
Intel was one of the most dramatic casualties of the session. The semiconductor giant fell by 28.58 percent on Friday, closing at $65.76. To put the scale of the damage into perspective, Intel had reached a peak of approximately $140.94 on June 22. By Friday’s close, it had dropped 53.34 percent from that peak. Its intraday low of $63.20 briefly pushed the decline even further.
In other words, an investor who bought Intel near its June peak would have seen more than half of the investment disappear by the end of October. And after a decline of this magnitude, the stock would need to rise by approximately 114 percent from Friday’s closing price just to return to its previous peak.
This is not an ordinary market correction. It is a significant repricing of investor expectations surrounding one of America’s most established semiconductor manufacturers. Intel’s collapse also serves as a warning that even companies operating in strategically important industries such as artificial intelligence and semiconductors are not immune to severe market volatility.
US Midterm Elections on Nov. 3
The United States heads into its midterm elections on Tuesday, Nov. 3. Although this is not a presidential election, the outcome could have significant implications for the remaining two years of President Donald Trump’s administration.
All 435 seats in the House of Representatives and approximately one-third of the Senate are being contested. The results will determine which party controls the two chambers of Congress and, consequently, how much legislative power the administration will have.
A Republican victory in both chambers would give the Trump administration greater room to advance its legislative agenda. Investors may focus on the implications for corporate taxation, deregulation, energy policy, trade, and government spending.
Interestingly, Wall Street does not necessarily view political gridlock negatively. If major policy changes become more difficult to implement, investors may perceive a degree of stability and predictability. Ultimately, the market reaction will depend not simply on which party wins, but on how the outcome changes expectations for economic policy, corporate profitability, and financial conditions.
The Historical Pattern: Do US Equities Rally After Midterm Elections?
One of the more interesting observations in financial-market history is that U.S. equities have often performed well in the months following midterm elections.
According to research by Charles Schwab, since 1974 the S&P 500 has delivered an average return of approximately 5.7 percent in the three months following midterm elections. Eleven out of 13 observations were positive. Over the six months following the elections, the average return was approximately 12.4 percent, with all 13 historical observations showing positive returns. BlackRock’s historical analysis also identifies a positive pattern, reporting an average six-month post-midterm return of approximately 14.1 percent since 1970.
These statistics are encouraging, but they need to be interpreted carefully. Historical performance does not guarantee future results. The sample size is relatively small, and the economic conditions surrounding each election were different. Interest rates, inflation, recessions, geopolitical events, and corporate earnings all played important roles in determining market performance.
VIX, Treasury Yields and the US Dollar: Three Indicators to Watch
Beyond the election results, I would pay close attention to three important market indicators.
First, the VIX Index. The CBOE Volatility Index, commonly known as the VIX, measures the market’s expectations of S&P 500 volatility over approximately the next 30 days, based on options prices.
A rising VIX may indicate increased demand for protection against market declines. A falling VIX may suggest that investors are becoming more comfortable with the market outlook. However, the VIX is not a direct prediction of whether the S&P 500 will rise or fall. It measures expected volatility, not market direction.
If election uncertainty subsides and the VIX begins to decline, that could provide a more supportive environment for equities. Conversely, a sharp rise in volatility would suggest that investors remain nervous.
Second is the U.S. 10-year Treasury yield. Bond yields are particularly important because they influence borrowing costs, corporate valuations, and the discount rates applied to future earnings.
Higher yields can put pressure on technology and growth stocks, whose valuations often depend heavily on expectations of future earnings. If Treasury yields rise because investors are concerned about inflation or government borrowing, equities could face additional pressure even after the election results are known.
Third is the U.S. dollar. The dollar’s movement can provide clues about global risk appetite, interest-rate expectations, and demand for safe-haven assets. A stronger dollar may put pressure on emerging markets and companies with substantial overseas revenue, while a weaker dollar can have different implications for U.S. multinationals and international investors.
Taken together, the VIX, Treasury yields, and the US dollar provide a useful framework for understanding whether the market is becoming more comfortable with the political and economic outlook.
Investment Strategy: Is a Post-Election Relief Rally Ahead, or More Market Turbulence?
As we enter the first full week of November, I would approach the market with cautious optimism rather than excessive enthusiasm.
There are reasons to believe that political uncertainty could ease after the election. Historical data suggest that U.S. equities have often performed well in the months following midterm elections. However, the recent weakness in technology and semiconductor stocks reminds us that markets are influenced by more than political developments.
My approach would be to monitor the following:
S&P 500: Does the broader U.S. market maintain its underlying strength, or does selling pressure spread beyond technology stocks?
Corporate earnings: Are companies delivering sufficient earnings growth to justify their valuations, particularly in the AI and semiconductor industries?
For investors with a longer-term horizon, political events should not become the sole basis for major portfolio decisions. Maintaining adequate liquidity, avoiding excessive leverage, and diversifying across sectors remain important principles, particularly during periods of heightened volatility.
For active traders, the election may create opportunities, but it also carries risks. Buying short-dated options simply in anticipation of a post-election rally can be dangerous. The market may already have priced in much of the expected outcome, and changes in implied volatility can affect option premiums even when the underlying index moves in the anticipated direction.
Final Thoughts
The Nov. 3 midterm elections are an important political event, but they are only one part of a much larger investment landscape.
Asian markets are entering the week with mixed sentiment. Wall Street is assessing the sustainability of AI spending, the valuation of technology stocks, and the outlook for interest rates. Meanwhile, investors are waiting to see whether the U.S. political landscape will change materially.
A post-election relief rally is certainly possible. History provides some encouragement, but it does not offer guarantees. Ultimately, the direction of the equity market will be determined by corporate earnings, economic growth, inflation, interest rates, and investor confidence—not merely by who wins control of Congress.
Politics may set the tone for the week. Fundamentals will determine the market’s direction.
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.
