US Stock Futures Dip As Democratic Midterm Wins Rattle AI Trade
US stock futures fell overnight as voters handed Democrats control of the House and Senate in Tuesday’s midterm election, reshaping the balance of power in Washington and raising questions about the outlook for the AI trade.
S&P 500 futures were down 0.2% at 2:21 a.m. ET Wednesday, while Nasdaq futures fell 0.3%, with both recovering from steeper losses earlier.
The greenback weakened against most major currencies, with the dollar index slipping 0.2%. It fell 0.3% against the Japanese yen and 0.5% against the Swiss franc, while the euro gained 0.4% against the dollar.
Treasuries rallied with the yield on the 10-year falling to around 4.93%.
Democratic victories in key state races are raising investor concerns about tougher restrictions on data center construction, potentially slowing the AI infrastructure spending boom that has helped fuel the stock market rally.
Texas has emerged as a particular concern for AI investors after Democrat Gina Hinojosa defeated Republican Gov. Greg Abbott. Hinojosa has called for a moratorium on new data centers, raising questions about the pace of AI infrastructure development in one of the industry’s biggest US hubs.
“On AI, the Democrats may push to scale back tax incentives, shift more grid costs onto developers, and introduce early safety regulations,” said Michael Strobaek, the global chief investment officer of Lombard Odier, a Swiss private bank.
The Texas upset was part of a broader wave of Democratic victories. The party won control of the Senate after flipping Republican-held seats in Texas, South Carolina, Kansas, and Ohio.
The results could complicate Trump’s economic agenda, including government spending, regulation, and the AI industry, where data center expansion and the political influence of tech billionaires have become flashpoints.
The election result also raises the prospect of a more contentious debt-ceiling fight in 2027, said Cedric Chehab, the chief economist at BMI Research.
A divided Washington could make negotiations more difficult, he said, unsettling investors already concerned about high borrowing costs and the US fiscal outlook, he added.
Asian stocks were mixed. Japan’s Nikkei 225 closed 1% lower, while South Korea’s Kospi reversed early losses to finish 1% higher. Hong Kong’s Hang Seng Index was also trading higher.
