This has shaped up as another stellar year for the iconic Dow Jones Industrial Average (DJINDICES:^DJI), benchmark S&P 500 (SNPINDEX:^GSPC), and growth-focused Nasdaq Composite (NASDAQINDEX:^IXIC). The artificial intelligence (AI) infrastructure build-out, better-than-expected corporate earnings, and record S&P 500 share buybacks have collectively lifted all three stock indexes to several new highs.
But recent volatility also suggests that equities may be on shaky ground. Just two days after the midterm elections, on Nov. 5, the Nasdaq Composite logged its largest-ever single-day point decline (1,422 points).
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
While headwinds are clearly mounting on Wall Street, historical precedent offers a different take.
Image source: Getty Images.
The stock market will need to climb a wall of worry
Election Day went, more or less, as the prediction markets had forecast. Democrats swept both houses of Congress, setting up a scenario in which few major spending bills will be signed into law from January 2027 through January 2029.
But there was one surprise on Election Night that clearly unnerved professional and everyday investors. Democrats flipped five governorships previously held by Republicans (with two races still uncalled by the Associated Press, as of Nov. 9), including in Texas, Ohio, and Georgia. These three states are critical to the AI data center build-out. Whereas President Donald Trump favors as little regulation as possible for AI, most Democratic lawmakers want to limit data center expansion and ramp up the vetting of large language models.
The stock market entered 2026 at its second-highest valuation in history. A market that’s priced for perfection can ill afford a slowdown in the AI infrastructure build-out.
The ideological differences between President Trump and the Democrat-led Congress will likely also make debt-ceiling negotiations more challenging.
If the Dow, S&P 500, and Nasdaq Composite are to reach new highs, they’ll have to climb the proverbial wall of worry.
Image source: Getty Images.
This past event has a flawless track record of forecasting the future on Wall Street
Although no predictive tool can ever guarantee what the Dow, S&P 500, and Nasdaq Composite will do over the short term, some past events have a knack for foreshadowing the future. One, in particular, has a flawless track record, dating back to 1950.
