Former Obama economic adviser Robert Wolf and former Trump campaign adviser Steve Cortes discuss the impact of the midterm elections on Wall Street.
U.S. stock futures fell sharply as Democrats scored key victories in the midterm elections and the Fox News Decision Desk predicted the party would take control of both houses of Congress.
S&P 500 futures fell 1.3%, while Nasdaq-100 futures fell 2.2%. Futures contracts linked to the Dow Jones Industrial Average slipped 0.8%.
The Fox News Decision Desk predicts that Democrats will control the Chamber of Deputies and taking control of the U.S. Senate after victories in key congressional elections across the country.
WHAT THE MIDTERM ELECTIONS COULD MEAN FOR MARKETS AND DEBT
A voter marks their ballot at the Kern County Elections Office on November 3, 2026, in Bakersfield, California. (Mario Tama/Getty Images)
The results added to uncertainty on Wall Street as investors weighed what a shift in Washington’s balance of power could mean for taxes, government spending, artificial intelligence, big tech, defense, health care, banking and cryptocurrency regulation.
“Markets appear to be pricing in the possibility of a stronger-than-expected Democratic performance, which could lower expectations for further fiscal stimulus,” Charu Chanana, chief investment strategist at Saxo in Singapore, told Reuters.
Historically, changes in control of Congress have not derailed stocks. The S&P 500 has risen through the end of the year in five of eight midterm cycles since 1930, when the president’s party lost the House, according to Ned Davis Research.
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Voters cast their ballots on Election Day at the Cross Insurance Center polling place on November 3, 2026, in Bangor, Maine. (Joe Raedle/Getty Images)
Prediction markets increasingly emphasized Democratic control of both chambers as election results came in, with more than $1.48 billion wagered on the midterm elections.
Chanana said investors may be concerned that Democratic control of Congress could lead to greater regulatory scrutiny of AI and big tech, especially as investors question high valuations and increased spending on AI.
“However, a decline in Treasury yields could eventually provide some relief, so the initial sell-off may not necessarily be sustainable,” she said.
The benchmark 10-year Treasury yield fell 6 basis points to 4.906%.
AFFORDABILITY TAKES CENTER STAGE AS AMERICANS TURN THEIR MID-TERM VOTES TO HIGH ISSUES
Kalshi billboards displaying U.S. Senate midterm election odds in Times Square in New York, November 2, 2026. (Angelina Katsanis/Bloomberg via Getty Images)
The US dollar has also weakened. The euro and sterling both gained against the dollar, while the dollar index fell 0.32%.
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Foreign markets also declined. Japan’s Nikkei fell 3%, South Korea’s KOSPI fell 1.6% and a broad index of Asia-Pacific stocks outside Japan fell 0.5%.
Eric Revell of FOX Business and Reuters contributed to this report.
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