Markets had a rough week. On Thursday, the Nasdaq fell 5.5% and the S&P 500 fell 4.4%, their worst day since April 2025, as investors worried that the Democrats’ midterm wins could slow the build-out of AI data centres. Chipmakers and AI cloud providers fell the most, and Asian markets followed on Friday.
(Our Chief Investment Officer, Stephanie Leung, shares her take on the sell-off in a short video. Watch it here.)
Americans voted this week in their midterm elections to decide control of Congress for the last two years of President Trump’s term. Even if you’re nowhere near the US, you likely have a stake: US companies make up roughly two-thirds of the global stock market, after all.
Historically, midterm years have been the weakest stretch of a US presidential term for stocks, and the year after the strongest. Since 1930, the S&P 500 has averaged 3.3% in midterm years and 14.0% the following year. Part of the reason is clarity: once the votes are counted, companies know more about where taxes, spending, and regulation are headed. That clarity can take time to arrive. This week’s sell-off shows markets are still working out what a Democratic Congress could mean for areas like AI spending.
Democrats now control both the House and the Senate, but historically, stocks have rallied after midterms regardless of which party won. BlackRock ran a simple test. US$100,000 put into US stocks in 2013 and left alone would have grown to about US$398,000 by the start of 2026. An investor who instead moved to cash whenever their preferred party was out of power – Republican or Democrat – would have ended up with only about US$186,000 to US$214,000. However things play out in Washington, staying invested has historically been the better call.
(For a portfolio that’s built around a risk level you’re comfortable with, see General Investing.)
In Other News: Why investing matters more with AI
AI is the zeitgeist, and the biggest tech firms are expected to spend more than US$5 trillion on it over the next four years. That’s money spent today for returns in the future, which is what investing comes down to. So it’s worth turning the question on your own finances: how much of what you earn today is going towards your future?
What's going on here?
The value a business creates goes two ways: to its staff, as pay, and to its owners, as earnings. Since the early 2000s, more of it has gone to owners. In the US, output per hour worked rose 2.2% in the year to June while pay after inflation stayed roughly flat. Wages and benefits now make up 52.8% of business output, the lowest share since records began in 1947.
Your work is still the engine of your finances, but a salary only captures part of the value being created around you. Your pay goes up when you get a raise, while a stake in a business grows with its earnings. Investing gives you that stake: a diversified portfolio makes you part-owner of thousands of businesses, from chipmakers to supermarkets.
As for AI itself, it’s getting cheaper fast. The price of models above a set capability level fell more than 80% between early 2025 and mid-2026, according to data from L&G and Artificial Analysis. That could help businesses do more for less, though it’s too early to say which will benefit most. A broad, global portfolio means you don’t have to pick them in advance.
What's the takeaway here?
AI is changing how businesses grow, and investing is how you get a share of that. How much you put in decides how big that share is, and it’s worth letting that amount grow as your career does. Like Big Tech’s AI spending, it’s money that’s put to work today for the future, and staying invested through the ups and downs is what gives it time to pay off.
(For more on AI and what it means for investors, see CIO Insights: Can AI afford its ambitions?)
Past performance is not an indicator of future returns. These articles were written in collaboration with Finimize.
