Markets crashed on the blue sweep — then bounced before breakfast
Stock futures plunged overnight as Democrats swept Congress, then clawed back into the green after President Trump accepted the result. The AI trade took the hardest hit; defence stocks fell while clean energy and banks rose.
Key facts
- Nasdaq-100 futures fell as much as 2.4% overnight and S&P 500 futures dropped 1.4% as results landed
- By 4:22 a.m. ET Wednesday, Dow futures were up 436 points (0.84%), S&P 500 futures had gained 0.35% and Nasdaq-100 futures were up 0.16%
- President Trump accepted the results, easing fears of a prolonged fight over the outcome
- The Goldman Sachs broad AI basket was down 15% in October and more than 24% from its peak
- Defence stocks fell — BAE Systems slumped 5% and Babcock more than 3% — while European banks and clean energy rose
- The dollar index fell 0.37% to 101.34 and the 10-year Treasury yield fell 6 basis points to 4.906%
Wall Street got whiplash overnight. As results from Tuesday's midterm elections rolled in during Asian trading hours, investors sold first and asked questions later: Nasdaq-100 futures fell as much as 2.4% and S&P 500 futures dropped 1.4%, while the dollar slid and government bonds rallied as traders rushed for safety.
By the early hours of Wednesday morning in New York, the panic had faded — Dow futures were up 436 points, or 0.84%, S&P 500 futures had gained 0.35% and Nasdaq-100 futures were up 0.16% by 4:22 a.m. ET. What changed the mood was acceptance. President Donald Trump accepted the election results and acknowledged that the war in Iran — and the higher gasoline prices that came with it — played a role in the Republican losses, easing fears of a prolonged fight over the outcome. Analysts said the rebound showed investors were not ready to abandon the buy-the-dip playbook, and that gridlock between a Democratic Congress and a Republican president could keep both parties in check.
The selling was concentrated where the AI boom lives. In Asia, chipmakers Samsung, SK Hynix and TSMC slid sharply, and SoftBank, a proxy for AI bets, led Japan's Nikkei 3% lower to a five-month low. The Nasdaq-100 had already entered a technical correction on Monday, and the Goldman Sachs broad AI basket was down 15% in October and more than 24% from its peak, according to analyst reaction carried by Reuters. The fear is specific: a Democratic Congress is expected to push tougher oversight of AI and the data-centre build-out, and Democrats made gains in key data-centre states, where public opposition to the industry's rapid expansion has been growing.
Not everything fell. European shares opened higher, with Germany's Dax and France's Cac up around 0.4% and London's FTSE 100 up 0.2%. European banks led the Stoxx 50 higher, and clean-energy names that had been hit by Trump administration policies were among the gainers — Democratic control protects federal renewables support from repeal. Defence stocks went the other way on fears Congress could hold up spending: BAE Systems slumped 5% and Babcock fell more than 3%, while RTX, Lockheed Martin, Northrop Grumman and Palantir all fell in pre-market trading.
Two single names told the wider story. Chipmaker AMD jumped about 6% in pre-market trading after forecasting faster-than-expected 2027 growth, a bright spot for the AI trade on its worst night. Companies linked to Elon Musk went the other way, with Tesla and SpaceX each down around 5% before the open.
In currencies and bonds, the dollar index fell 0.37% to 101.34, with the euro rising to $1.1249 and sterling firming to $1.3464, while the yield on the benchmark 10-year Treasury note fell 6 basis points to 4.906% as bond prices rose. Gold rallied as investors sought safety.
Why it matters for ordinary investors: one night of futures trading is a mood, not a verdict. The new Congress does not sit until January 3, and no Democratic bill becomes law without the president's signature. The real repricing will happen bill by bill — on AI rules, data centres, taxes and spending — and the history books offer some calm: stocks have tended to recover once election uncertainty fades.
What to watch: Wednesday's cash-market open after the futures rebound; whether the AI sell-off resumes or stabilises; the first policy signals from Democratic leaders; and Friday's U.S. jobs report.