Bonfire of tech sentiment & market fireworks

Chris Beauchamp IG

Growing worries about what the Blue Wave will do to AI spending have overwhelmed tech stocks, says Chris Beauchamp, Chief Market Analyst at online trading and investing platform IG.

Stocks go from euphoria to panic

Yesterday was just an almighty fake-out it seems. Tech stocks have gone into freefall, as investors focus on what the new guys in Congress will do to a sector so favoured by the current president and his coterie. Markets, of course, hate uncertainty, and the uncertainty around what happens next to such a pivotal sector means that the instinct to sell and cut exposure becomes too strong to resist. 2026 has been the year when AI became the lynchpin of the market rally. If this goes south, this market action turns from rotation to general panic.

Earnings growth at risk

All year the strength in US earnings, another key plank of the bull market narrative, has hinged on AI and tech. There is likely to be more selling if earnings estimates start to get cut back, even after the drop in valuations for US stocks seen in recent months. And with Trump likely about to try at least one last strike on Iran, risking a new surge in oil, we could see a fresh inflationary surge that does further damage to global equities.

Author

Chris Beauchamp

Chris Beauchamp has been with IG for four years, and in that time has become a regular commentator and analyst for the financial press and TV, with appearances on all the major financial channels as well as the BBC and Sky News.

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Gold consolidates gains around $4,100

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US Dollar breaks below 101.50 as Democrats sweep Congress

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