{"id":18571,"date":"2026-11-06T10:39:51","date_gmt":"2026-11-06T18:39:51","guid":{"rendered":"https:\/\/www.wealthfront.com/blog\/?p=18571"},"modified":"2026-11-06T10:39:52","modified_gmt":"2026-11-06T18:39:52","slug":"november-2026-midterm-selloff","status":"publish","type":"post","link":"https:\/\/www.wealthfront.com/blog\/november-2026-midterm-selloff\/","title":{"rendered":"What to Know About the Post-Midterm Sell-Off"},"content":{"rendered":"\n

This week\u2019s market sell-off was the worst since the \u201cLiberation Day\u201d tariff announcement in April 2025. On Thursday the S&P 500\u00ae<\/sup>, the Nasdaq Composite\u00ae<\/sup>, and the Dow Jones Industrial Average erased their initial post-midterm gains and ended the day down 4.36%<\/a>, 5.52%<\/a>, and 3.44%<\/a>, respectively. The tech-heavy Nasdaq also fell into correction territory, sliding more than 10% below its previous month record.<\/p>\n\n\n\n

Market downturns can understandably feel stressful in the moment. So what caused the sell-off this week, and what should investors do in response? <\/p>\n\n\n\n

Before we get into the specifics, we want to state the important takeaway upfront: history shows market volatility isn\u2019t a reason to panic, and investors have generally been well served by staying invested through uncertainty. Read on for more details.<\/p>\n\n\n\n

What caused this week\u2019s sell-off?<\/strong>
<\/h2>\n\n\n\n

Despite a stock market rally on Wednesday immediately following the midterms, stocks connected to data centers\u2014which were heavily rejected<\/a> by midterm voters\u2014saw steep declines. Chipmakers, semiconductors, and neocloud companies were hit particularly hard<\/a>. These concerns then spread to the broader tech sector as investors weighed the impact of less AI capital expenditure, a deceleration in the data center buildout, and changing AI sentiment on the industry at large. <\/p>\n\n\n\n

Excitement about AI\u2019s potential impact on economic growth have been pushing markets up in recent months, driving the Magnificent 7 stocks (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla) to make up roughly one-third<\/a> of the S&P 500. But on Thursday those seven stocks lost a combined $1 trillion<\/a> in market value, showing how concerns about the future health of one large sector can have wide ripple effects, which is part of what we saw this week.<\/p>\n\n\n\n

Other factors driving a heightened atmosphere of investor concern include persistent inflation, ongoing geopolitical conflicts, and uncertainty about AI-driven economic growth in a new political landscape.<\/p>\n\n\n\n

For a deeper dive into this week\u2019s market drivers, see the<\/em> latest issue of Vested Interest<\/em><\/a>, our economics newsletter.<\/em><\/p>\n\n\n\n

How should investors react?<\/strong>
<\/h2>\n\n\n\n

They shouldn\u2019t! While market downturns are never pleasant in the moment, as we\u2019ve written before<\/a>, history shows that markets tend to rise over time. So staying the course, even through a steep sell-off, is likely to work out in your favor. We encourage investors to see short-term stock market declines as an opportunity: If you\u2019re able to keep putting money in the market while it\u2019s down, you\u2019ll be in a better position  to reap the benefits when it eventually climbs back up again. <\/p>\n\n\n\n

What about finding the \u201cright time<\/a>\u201d to invest? You might hear people talking about \u201cbuying the dip\u201d or waiting until the market bottoms out to begin investing again. This sounds good in theory, but it is hard to do in practice. That\u2019s because it\u2019s nearly impossible to tell whether the market has hit bottom or if it will continue to fall until after the fact. <\/p>\n\n\n\n

There\u2019s also the opportunity cost of sitting on uninvested cash while waiting for a bottom. Academic research has shown that trying to time the market doesn\u2019t work \u2013 even most professional investors can\u2019t consistently get it right. That\u2019s why we think it\u2019s wise to stick to your investing plan regardless of what the market is doing. As you\u2019ve surely heard before, time in the market beats timing the market. <\/p>\n\n\n\n

Instead of changing your strategy, we think it\u2019s smart to keep investing and focus on the three key factors within your control: <\/p>\n\n\n\n

    \n
  1. Diversification:<\/strong> Periods of volatility are a good reminder of the importance of diversification\u2014or buying a wide range of investments instead of focusing on a single company, sector, or geography. Diversification can increase your risk-adjusted returns and, to some extent, insulate you from losses. When you feel insulated from losses, it\u2019s easier to stay invested, which is key to investing success.\u00a0<\/li>\n\n\n\n
  2. Taxes:<\/strong> Market turbulence offers a silver lining in the form of tax-loss harvesting and direct indexing, which is designed to take advantage of market dips to help increase your after-tax returns. It\u2019s why we built automated Tax-Loss Harvesting into all of our taxable managed accounts, and is when we see it generate the most value for our clients. During<\/strong> yesterday\u2019s downturn, our software harvested $7.4 million in losses<\/strong>, and we estimate it has saved clients $1.3 billion in taxes since inception (through 06\/30\/2026).<\/li>\n\n\n\n
  3. Fees:<\/strong> Regardless of how the market behaves, one of the easiest ways to hurt your returns is to overpay in advisory fees and ETF fees (known as the \u201cexpense ratio\u201d). Because these fees can add up over time, Wealthfront charges 0.25% or less for our investing products (depending on which specific product you use), which is about a quarter of what a traditional financial advisor will change. And when we select ETFs for your portfolio, we focus on keeping those costs low, too.<\/li>\n<\/ol>\n\n\n\n

    Ultimately, our goal is to help you grow your long-term wealth regardless of the market environment. That\u2019s why our philosophy is to keep you focused on what you can control, and to help you avoid the temptation to take action that could hurt your outcomes later. We hope that by sharing broader context on market behavior and building products that automate these best practices, we can make it even easier to achieve your financial goals with greater confidence.<\/p>\n","protected":false},"excerpt":{"rendered":"

    This week\u2019s market sell-off was the worst since the \u201cLiberation Day\u201d tariff announcement in April 2025. On Thursday the S&P 500\u00ae, the Nasdaq Composite\u00ae, and the Dow Jones Industrial Average erased their initial post-midterm gains and ended the day down 4.36%, 5.52%, and 3.44%, respectively. The tech-heavy Nasdaq also fell into correction territory, sliding more […]<\/p>\n","protected":false},"author":10040,"featured_media":18575,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[1282],"tags":[],"coauthors":[1270],"class_list":["post-18571","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"acf":[],"yoast_head":"\nWhat to Know About the Post-Midterm Sell-Off | Wealthfront<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.wealthfront.com/blog\/november-2026-midterm-selloff\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What to Know About the Post-Midterm Sell-Off | Wealthfront\" \/>\n<meta property=\"og:description\" content=\"This week\u2019s market sell-off was the worst since the \u201cLiberation Day\u201d tariff announcement in April 2025. On Thursday the S&P 500\u00ae, the Nasdaq Composite\u00ae, and the Dow Jones Industrial Average erased their initial post-midterm gains and ended the day down 4.36%, 5.52%, and 3.44%, respectively. 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