End of 2026 Review: Politics, AI, and the Federal Reserve, the market is undergoing a "risk repricing."

Recently, there have been quite a few events, which has directly led to a significant change in the expectations for Q4 this year, to the extent that there are more pessimistic expectations about whether the trillion-dollar AI technology bubble will burst.

The Democratic Party has regained control of both chambers of Congress in the United States, and the Trump administration is about to face a Congress led by the opposition party; NVIDIA CEO Jensen Huang is caught up in an investigation involving personal relationships, chip exports, and national security; the Nasdaq fell 5.56% in one day after the election, and then quickly rebounded; meanwhile, inflation in the United States is heating up again, and the possibility of the Federal Reserve raising interest rates again this year has re-entered the market's sight.

As we enter the final phase of 2026, the market is not facing a simple "year-end market," but a complex environment where political, monetary policy, artificial intelligence valuation, and crypto liquidity are all changing at the same time.

As of November 11, 2026, Bitcoin is approximately $73,800, and Ethereum is about $2,057; the S&P 500 index is still up about 11.3% for the year. This indicates that risk assets are not in a state of comprehensive collapse, but the previous phase of market growth driven by a single narrative is coming to an end.

First Change: Trump's Republican Party Loses Control of Both Chambers

Strictly speaking, it wasn't Trump himself who "lost both chambers," but the Republican Party lost control of the Senate and House of Representatives in the 2026 midterm elections. The Associated Press determined on the evening of November 3 and early morning of November 4 that the Democratic Party secured both chambers; Reuters data shows that the Democratic Party gained at least 39 seats in the House and flipped 7 seats in the Senate. Associated Press election results, Reuters market reports

This means that starting in 2027, the United States will form a "Republican President + Democratic Congress" split government structure. Although the Democratic Party cannot modify policies at will due to presidential veto power, it can control congressional committees, investigation procedures, budget negotiations, and legislative agendas.

The market needs to focus not on the election results themselves, but on how they will change the policy path:

AI data centers, power consumption, and tech company regulations may face stricter scrutiny;
Taxes, government spending, debt ceilings, and annual budget negotiations may become more difficult;
The Trump administration's ability to push a new round of fiscal policy may be limited;
Policy expectations in sectors like healthcare, clean energy, and consumer protection may be repriced;
Congressional investigations may increase compliance and political risks for large tech companies.

The first round of market reaction after the election was very intense. On November 5, the Nasdaq Composite Index fell 5.56%, marking the largest single-day drop in 19 months. The market is concerned that the Democratic Party may tighten regulations on AI infrastructure and data centers, thereby affecting the capital expenditure cycle that has driven tech stock growth.

But this does not mean that "with the Democratic Party controlling Congress, US stocks will necessarily continue to fall." Subsequently, oil prices fell, alleviating inflation concerns, and on November 9, the S&P 500 index rebounded 2.35%, while the Nasdaq rose 2.74%. The market is trading on policy uncertainty rather than an already confirmed economic recession. Reuters market data

Second Change: The Huang Renxun Incident Undermines Trust Premium in the AI Sector

Regarding the rumors that Huang Renxun may resign as CEO of NVIDIA, it is currently inconclusive; of course, this result may become clearer after today.

What has been confirmed is that Huang Renxun admitted to an extramarital affair; related reports further link this matter to China’s chip business and potential foreign intelligence activities. The NVIDIA board has established an investigation committee overseen by independent directors and external legal advisors.

However, the NVIDIA board explicitly stated that there is currently no reason to believe that national security or company secrets have been compromised and continues to support Huang Renxun and his management team. Huang Renxun himself also stated he would cooperate with the investigation and continue to lead the company. Huang Renxun open letter, NVIDIA board statement

Therefore, what really needs to be observed at the end of the year is not the swelling "resignation rumors" on social media but rather three verifiable questions:

Will the independent investigation uncover issues concerning company secrets, export approvals, or national security;
Will the US government further restrict NVIDIA's export of high-end chips to China;
Will NVIDIA's clients adjust their procurement or data center investment plans due to political risks?

This matter's impact is not limited to NVIDIA. As the core asset in the AI capital expenditure chain, if the market begins to question its governance stability, export space, or customer demand, semiconductor, server, power equipment, cloud computing, and data center-related stocks could all be reevaluated.

As of November 11, NVIDIA's stock price is $173.73, rebounding 2.94% on that day. This indicates that the market has not formed a consensus expectation that "Huang Renxun will inevitably resign," but volatility and event risk have significantly increased.

Third Change: The Biggest Variable at Year-End May Not Be Politics but the Federal Reserve

On October 28, the Federal Reserve maintained the federal funds rate target range at 3.75% to 4.00%. Notably, two committee members voted to support a 25 basis point rate hike, indicating that discussions about rate hikes are no longer at the level of market speculation. Federal Reserve October statement

The CPI in the United States rose 0.4% month-on-month in October, and core CPI rose 0.3%; non-farm employment increased by 165,000 jobs, with an unemployment rate of 4.1%. Due to the government shutdown in October 2025, which caused missing price data, the Bureau of Labor Statistics could not publish reliable year-on-year data for most items, therefore one should not piece together a "October year-on-year inflation rate." US Bureau of Labor Statistics CPI report, employment data

This set of data forms a combination uncomfortable for risk assets:

The economy and employment are not weak enough to force the Federal Reserve to cut rates;
Inflation is sufficiently high to keep the possibility of further rate hikes;
High interest rates may continue to suppress high-valuation tech stocks and crypto assets;
If energy prices rise again, inflation pressure may expand again.

The last Federal Reserve meeting of the year will be held on December 8-9, and the November CPI will be released on December 10. This means the Federal Reserve may need to decide on interest rates before obtaining the next complete CPI report. This will further amplify the importance of the statement, economic forecast, and press conference in the December meeting. Federal Reserve meeting calendar

Outlook for US Stocks at the End of 2026: Not Overall Bearish, but Valuation Differentiation

The key question for US stocks at the end of the year is not "will it rise," but whether earnings can continue to support current valuations.

AI and Semiconductor Sector

AI demand has not disappeared due to a single political event. NVIDIA recently announced quarterly revenue of $96.2 billion, a year-on-year increase of 106%, with data center revenue reaching $89 billion, a year-on-year increase of 117%. The fundamentals remain strong, but political investigations, export restrictions, power costs, and valuation concentration are increasing risk premiums. NVIDIA financial report

A more reasonable approach at the end of the year is not to simply abandon AI but to differentiate:

Companies with real orders, cash flow, and pricing power;
Companies that primarily rely on forward stories to maintain valuations;
Enterprises directly affected by chip exports;
Enterprises that can benefit from power, heat dissipation, network, and infrastructure demand.

Defensive and Value Sectors

When technology regulation, interest rates, and policy uncertainty rise simultaneously, sectors with stable cash flow, controllable liabilities, and lower valuations may gain relative advantages. Healthcare, utilities, essential consumer goods, and some financial assets may become tools to disperse the concentration of funds in technology.

However, "defensive sectors" do not mean they will not decline. Highly leveraged utilities will still be affected by interest rates, and the healthcare sector may also face price regulation from a Democratic Congress. Investors need to look at specific assets, not just industry labels.

Outlook for the Crypto Market at the End of 2026: Macro Liquidity Becomes the Dominant Variable

Bitcoin has not shown completely independent safe-haven attributes after the midterm elections and tech stock sell-off. During the downturn of risk assets on November 5, a total net outflow of over $500 million occurred in US spot Bitcoin and Ethereum ETFs, with more than $1 billion in crypto leveraged positions being liquidated within 24 hours.

This again indicates that during periods of short-term pressure, Bitcoin may still fluctuate synchronously with the Nasdaq, high-beta tech stocks, and global liquidity, rather than automatically moving in the opposite direction.

Optimistic Scenario

If energy prices fall, inflation slows month-on-month, the Federal Reserve maintains interest rates, and ETF funds turn back into net inflows, Bitcoin may retest prior pressure areas. After the risk appetite recovers, ETH and high liquidity mainstream tokens are more likely to receive subsequent funds.

Neutral Scenario

If the Federal Reserve continues to maintain a hawkish stance but does not implement actual rate hikes, while political and AI risks do not further deteriorate, Bitcoin may maintain wide fluctuations. This environment is more suitable for managing positions, executing in batches, and using range strategies, rather than chasing after every rebound.

Pessimistic Scenario

If there is another rate hike in December, a second round of sell-off in the AI sector, continued ETF outflows, or if the investigation into NVIDIA escalates into substantial national security and export events, Bitcoin may retest support below again. Less liquid altcoins usually experience greater pullbacks than BTC and ETH.

How Ordinary Users Should Face the Year-End Market

The biggest mistake at year-end is to immediately stake all assets in a single direction upon seeing major news. Political outcomes, corporate investigations, and monetary policies are not events priced in at once.

A more pragmatic response includes:

Separating long-term holdings, trading funds, and emergency funds;
Not increasing leverage just because of the phrase "year-end market";
Reducing overly concentrated positions ahead of Federal Reserve meetings, inflation data, and corporate investigation results;
Focusing on earnings, cash flow, and policy sensitivity in US stocks, rather than just looking at hot sectors;
Simultaneously observing ETF funds, dollar liquidity, and US tech stocks for crypto assets;
Positions in altcoins should be lower than those in high liquidity assets like BTC and ETH;
Pre-setting conditions for each position rather than just setting profit targets;
Retaining some cash or stablecoins to respond to opportunities in high volatility.

In Conclusion

In the final stage of 2026, the core contradiction of the market has changed.

Earlier this year, investors focused on how fast AI could grow and whether crypto assets could continue to receive institutional funding; now, the market needs to simultaneously answer more difficult questions: How will the Democratic Party regulate technology and AI after taking control of Congress? Will the NVIDIA investigation escalate from a personal incident to corporate governance and national security risks? Will hot inflation force the Federal Reserve to raise interest rates again? Can Bitcoin establish a more independent funding logic when tech stocks are under pressure?

Therefore, the end of 2026 feels more like a risk repricing rather than a determined bull-bear showdown.

What truly matters is not predicting every piece of news in advance, but maintaining the ability to adjust, exit, and reallocate when different scenarios arise.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到[email protected]，本平台相关工作人员将会进行核查。