Stock futures turned positive early on Wednesday, reversing earlier losses, as traders weighed the impact of the Democrats taking control of Congress and several key gubernatorial wins in the 2026 U.S. midterm elections.
Futures tied to the S&P 500 traded 0.2% higher, while Nasdaq-100 futures were up 0.2%. Futures tied to the Dow Jones Industrial Average added 0.5%. Futures were trading lower earlier in the session.
The Democratic Party swept to victory, taking control of Congress overnight. The AP also projected that Texas Democratic governor candidate Gina Hinojosa is the winner over Republican incumbent Greg Abbott. Hinojosa has pledged a moratorium on data centers in the key tech hub.
Democrat control of the House and Senate will weigh on some areas of the market, especially stocks related to the artificial intelligence buildout, according to Wall Street analysts. Investors fear a big Democratic win could mean more restrictions on data centers nationwide. AI-linked stocks have already pulled back in recent weeks on concern about a slowing pace in data-center spending.
Elon Musk’s SpaceX was down 4.8% in premarket trading, while Tesla shares shed 4.9%. Trump Media shares were down 6.5% in premarket trading, while neocloud stocks CoreWeave and Nebius were down 3.6% and 1%, respectively.
Elsewhere, Big Tech shares rose in premarket trading, with Microsoft up 0.3% and Amazon up 1.1%, as Nvidia moved 0.5% higher. Alphabet was the outlier, trading around 0.4% lower.
U.S. health insurers and hospital operators also advanced, with United Health up 1.4%, Molina Healthcare rising 6.3%, Centene adding 4.7% and HCA Healthcare up 1.44%.
Renewables stocks rallied sharply in premarket trading, while defense stocks fell.
Equities “trended lower as it’s looked more likely that Democrats are going to pick up the House and most likely the Senate,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial, Tuesday evening as futures were pulling back.
He added: “If you get some governorships that are Democratic, what does that mean for the data center buildout, which has already seen a lot of skepticism over the last couple weeks in terms of the hyperscaler capex spending?”
AMD shares initially surged double digits in post-market action after the company, a key player in the AI trade, reported third-quarter earnings and revenue that blew past analyst expectations. The stock was last seen 6.3% higher in premarket trade.
On the overall market, investors believe a blue wave would also be a headwind as it likely rules out any more business-friendly policies like tax breaks and possibly increases scrutiny on industries like banking.
Andrew Slimmon, Morgan Stanley Investment Management, said the result will bring “gridlock” to Washington, but added that the markets “like gridlock — they don’t like a party with too much power.”
Speaking with CNBC’s “Squawk Box Europe”, Slimmon said that if the result increases the push for a resolution to the Middle East conflict, that may bring oil prices lower. “That’s been an issue for the Fed, and inflation, and part of the reason that rates are higher.”
Renewable shares like solar stocks traded higher in the post-market on speculation a Democratic majority in Congress would halt policies by President Donald Trump taken against the industry. The Invesco Solar ETF was up 3% in Robinhood trading.
President Donald Trump may have helped ease pressure on the market a bit overnight by not challenging the midterm results in an interview with the Wall Street Journal. Trump told the WSJ, “I think we’ll work with the Democrats, and we’ll get along very well with them.”