Stock futures soar after Democratic rout in midterms

Stock futures soared Wednesday morning , after Democrats’ resounding victory in the midterms.

Dow Jones Industrial Average futures were up roughly 1,150 points before the opening bell, more than 2 percent higher than closing time Tuesday. S&P 500 and Nasdaq composite futures were up by more than 90 and 120 points, respectively.

As of the late morning, Dow Jones, S&P 500 and Nasdaq futures were respectively up by 1,416 points, 117 points and 290 points.

Democrats flipped the House, Senate and multiple governor’s mansions in Tuesday’s elections , breaking up the GOP’s grip on Congress and dealing a political blow to President Trump.

“Wall Street loves divided government, because typically divided government doesn’t do anything, and it’s very much the case in this particular situation that it’s going to be very hard to do anything affirmative during the last two years of Trump’s administration,” Daniel Alpert, the executive chair at Westwood Capital, told The Hill.

Liz Ann Sonders, the chief investment strategist at the Schwab Center for Financial Research, argued Wednesday on Schwab Network the “decisive” nature of the election allowed investors to “look forward” to what’s in store for the economy.

Democrats across the map campaigned on affordability issues, blaming Trump and Republicans for high gas prices amid the Iran war and persistent inflation . That paid off, as Decision Desk HQ has called 249 House and 54 Senate seats for Democrats as of midday Wednesday.

Voters also soundly rejected the explosion in data center construction. Of the 44 measures on the issue, voters backed restricting construction in 37 instances, with the restrict position leading in six other cases, according to data from Redbud Consulting.

Democrats, such as Sen.-elect Sherrod Brown in Ohio and Gov.-elect Gina Hinojosa in Texas, campaigned on reining in the AI build-out. Investors took notice, as shares of tech companies like Nvidia and Elon Musk’s SpaceX were down as of late Wednesday morning.

“The AI industry has clearly benefited from a hands-off approach by the Trump administration, which is very unlikely to be continued by a Democratic Congress,” Alpert noted.

If the AI industry experiences a “disruption” from the next Congress, the gains in stock futures will reverse, Alpert argued.

“Long story is it’s a pop,” Alpert, who noted he has shorted the market, said of stock futures surging. “People are going to buy into that pop because the divided government argument, and then we’re going to see what really happens.”

Bond yields also dipped in the aftermath of Democrats’ resounding victories. The 10- and 30-year U.S. Treasury bond yields were down by roughly 4 and 3 basis points, respectively, as of the late morning.

The notes have climbed this year , as the federal government’s mounting debt and a rise in oil prices amid the Iran war led to a sell-off.

On the campaign trail, Democrats vowed to lower prices by restricting Trump’s tariff authorities , forcing him to wind down the Middle Eastern conflict and tackling rising healthcare costs.

Sonders argued that if lawmakers are able to bring down costs, their actions will seep into the markets.

“To the extent that there is success in bringing the cost of living down, which is how constituents typically categorize, what we categorize as inflation and the various metrics measuring that … I think it would generally be seen as a positive for both the economy and the equity market,” she said.

Alpert said, however, that Trump could derail the stock futures’ “pop” during the lame-duck session. The president told Politico’s Dasha Burns on Tuesday night he will “ take a look ” at the potential next steps in the war, which is in its eighth month.

Roughly 6 in 10 voters said Trump made the wrong decision to take military action against Iran, according to NBC News exit polling .

Despite voters rebuking the president and Republicans over the war, Alpert noted Trump could “assert himself in ways that nobody can really anticipate” until the next Congress.

“Oil, I believe, will actually likely resolve itself fairly quickly unless [Trump] starts dropping bombs,” Alpert said.