U.S. stock futures fell sharply as Democrats scored key victories in the midterm elections and election desks projected the party would take control of both chambers of Congress. S&P 500 futures dropped 1.3%, while Nasdaq-100 futures slid 2.2%, according to Fox Business. Futures tied to the Dow Jones Industrial Average fell 0.8%.
Stock Futures Tumble as Midterm Election Results Point to Democratic Majorities
Prediction markets saw more than $1.48 billion wagered on the midterms as returns came in.
The results introduced fresh uncertainty to Wall Street. Investors evaluated what a change in Washington’s balance of power could mean for government spending, taxes, artificial intelligence, Big Tech, health care, defense, banking, and cryptocurrency regulation.
Charu Chanana, chief investment strategist at Saxo in Singapore, noted that markets appeared to be pricing in a stronger-than-expected Democratic showing that could reduce expectations for further fiscal stimulus. Chanana added that investors may worry about increased regulatory scrutiny on artificial intelligence and Big Tech, especially given questions regarding lofty valuations and rising AI-related spending.
Global Markets React to Election Outset
Major technology shares, including Microsoft, Amazon, and Nvidia, traded lower in extended action. High-risk data center play CoreWeave dropped 6% in Robinhood overnight trading, while Elon Musk’s SpaceX also fell 6% on the platform.
Renewable energy shares, such as solar stocks, moved higher on speculation that a Democratic majority in Congress could halt policies enacted against the industry by President Donald Trump. The Invesco Solar ETF gained 3.5% in Robinhood trading.
The benchmark 10-year Treasury note yield fell 6 basis points to 4.906%, according to Fox Business. The U.S. dollar weakened against foreign currencies, with the euro and British pound both gaining ground while the dollar index declined 0.32%. Futures on the Cboe Volatility Index increased, climbing above 20 as investors braced for potential market pullbacks.
Japan’s Nikkei fell 3%, South Korea’s KOSPI dropped 1.6%, and a broad index of Asia-Pacific stocks outside Japan decreased by 0.5%.
Gina Hinojosa Wins Texas Governor Race
Texas Democratic gubernatorial candidate Gina Hinojosa defeated Republican incumbent Greg Abbott, becoming the first Democrat to win a governor’s race in Texas since 1990, as reported by Mother Jones, according to Motherjones. Abbott, who began his campaign with $100 million in the bank, sought a fourth term before facing defeat.
Hinojosa centered her campaign on a populist message criticizing state corruption and the rapid expansion of data centers and voucher programs, pledging a full moratorium on data center construction until the legislature could convene to establish new regulations.
Anthony Saglimbene, chief market strategist at Ameriprise Financial, noted that equities trended lower as it appeared increasingly likely that Democrats would capture the House and likely the Senate. Saglimbene pointed out that the outcome of gubernatorial races carries important implications for the data center buildout, which has faced mounting skepticism from investors regarding hyperscaler capital expenditures.
Earlier coverage: Stock Futures Fall on Projected Democratic Gains and AI Regulation Fears
