Futures Rally, Dollar Slides as Democratic Sweep Reshapes Markets

U.S. equity futures reversed an overnight plunge Wednesday as investors digested a Democratic sweep of both chambers of Congress, with the S&P 500 futures rising 0.9% to 7,665 by 8:15 a.m. ET. The Dow Jones Industrial Average futures gained roughly 870 points, or 1.7%, while the Russell 2000 small-cap index jumped 1.3%. The Nasdaq 100 futures remained fractionally lower, down 0.2%, after earlier dropping as much as 2.4% on fears of tighter AI regulation and a potential freeze on Texas data center projects.

The VIX volatility index tumbled 12.8% to 18.16, signaling a rapid easing of anxiety.

The broad-based rebound followed an initial "blue tsunami puke," as dip buyers turned the selloff into a rally, according to ZeroHedge. Democrats flipped Senate seats in Texas, Ohio, Kansas, South Carolina, North Carolina, Iowa and Maine, and won the governorships of Texas, Ohio and Georgia. The party is on track for at least 54 Senate seats, the outlet reported.

President Trump helped calm markets, saying Democrats did "a good job" and that he could work with them, ZeroHedge reported. That conciliatory tone, combined with a blowout sales forecast from chipmaker Advanced Micro Devices Inc. and the unwinding of election hedges, flipped futures solidly green.

The Bloomberg dollar index slid 0.5% to its lowest since Sept. 30, with the euro gaining 0.6% against the greenback. Gold jumped 3% to blast back above $4,000 an ounce, while silver surged nearly 5%. West Texas Intermediate crude fell about 1% to near $95 a barrel after Trump played down the prospect of imminent strikes on Iran.

Treasuries were bid, with yields 3 to 5 basis points lower across the curve. The 10-year yield stood at about 4.915% as the prospect of divided government curbed the fiscal outlook, ZeroHedge reported.

**Sector Rotation and Key Movers**

The political shift triggered sharp sector rotations. Solar stocks soared, while defense stocks slid. Among the Magnificent Seven, most shares were higher in premarket trading: Amazon.com Inc. rose 3%, Meta Platforms Inc. added 0.8%, Microsoft Corp. gained 1.9%, Apple Inc. rose 1.5%, and Alphabet Inc. climbed 0.9%. Nvidia Corp. was flat, down 0.1%.

Tesla Inc. fell 5%, and SpaceX dropped 6%, as election results sharpened investor concern over the future of the Republican megadonor’s key holdings, ZeroHedge reported.

Chip stocks led the tech rebound. Advanced Micro Devices gained 6.3% after giving a sales forecast that soared past analysts’ projections, a sign of buoyant demand for data center processors. Super Micro Computer Inc. rose 9.2%, and Arista Networks Inc. climbed 10.9%, both lifted by earnings.

Some data center and cloud computing stocks slipped after Democrats clinched control of Congress. CoreWeave Inc., Equinix Inc., GE Vernova Inc. and Oracle Corp. were among the decliners, ZeroHedge reported. Bank of America strategists had described the Texas governor’s race as a “referendum on affordability versus AI data centers,” the outlet noted. Gina Hinojosa is set to become Texas governor.

**Pre-Election Context**

The rally built on gains from Tuesday, when the S&P 500 snapped a three-day losing streak and the Philadelphia semiconductor index rebounded 2.6% after an 11.6% three-session plunge, according to Reuters. That pre-election session saw heavyweight tech stocks lift the S&P 500 and Nasdaq, as investors digested strong U.S. economic data and awaited the midterm results.

The economic stakes were high. One issue rose above all others in the midterm election: the economy, with soaring prices at the pump, grocery store, housing market and on electric bills stretching families, the Daily Herald reported. The Times Union reported that the stakes were so high that Shane Dunn, a 65-year-old cook, voted for the first time in his life in Levittown, Pennsylvania.

**Other Corporate and Macro News**

In premarket trading, several stocks moved on earnings and corporate actions. Block Inc. rose 10% after the payments company reported third-quarter earnings and revenue that inched past analysts’ expectations. Duolingo Inc. surged 19% after raising its full-year revenue and adjusted Ebitda outlook above consensus. CVS Health Corp. slipped 2% after saying it plans to spin off its retail pharmacy business.

The Treasury Department will publish its quarterly refunding announcement at 8:30 a.m. ET and sell $75 billion of 17-week bills at 11:30 a.m. The economic data calendar includes October ADP employment change, September trade balance, final S&P Global services and composite PMIs, and the ISM services index. No Federal Reserve speakers are scheduled.

Bitcoin rose about 1% to $78,480.