The US stock indices, including NASDAQ, the Dow and the S&P 500, may open lower on Wednesday as Democrats retake majority control of the Senate. However, some new winners could emerge in the market.
The markets reacted sharply despite Brent oil prices trading near $103 per barrel. The dollar dropped below 101.5, hitting its lowest mark since late September 2026 amid concerns that the AI investments might stall.
Stock futures dropped overnight on Tuesday as early vote counts pointed towards a Democratic sweep of the US Congress. As of 9:46 p.m. Eastern Time, Dow futures dropped 0.76 per cent, while the S&P 500 futures were down 1.13 per cent and Nasdaq-100 futures tumbled close to 2 per cent.
The wave hit the Asian markets as well, where stocks went on a rollercoaster ride. Japan’s tech-heavy Nikkei 225 closed down by 1.42 per cent. South Korea’s KOSPI fell as low as 4 per cent before paring losses. Hang Seng remained unaffected, continuing its fourth consecutive day of gains powered by major technology, chip and AI-related shares.
Investors turned to US Treasury bonds as they anticipated regulatory issues to rattle risky assets in the stock market.
Treasury bonds staged a massive rally, with a political gridlock expected to limit the Trump administration from passing further tax cuts or massive bills. The legislative gridlock eased fears of heavy treasury issuance, locking in the supply.
Trump’s push for deregulation and tax cuts was expected to push AI investments, indirectly benefiting AI-linked stocks. The administration had introduced policies like the America’s AI action plan, which provided access to public lands and pushed data-centre growth. Executive orders had also sought to speed up the AI permission process.
However, the Democrats firmly stand against the buildout of data centres. Nvidia shares dipped 1.5 per cent, while Micron Technology and Broadcom fell by 3 per cent each before turning green. Tech giants Apple, Microsoft and Amazon also traded in the red before paring losses.
Historically, stock markets have fared well under divided governments. However, some analysts caution that the pattern might not repeat.
Healthcare and solar stocks to win with Democrats?
Though Trump’s veto limits law-making, Democrats mentioned plans to reverse Medicaid cuts and extend the ACA (Affordable Care Act). This has diverted focus to healthcare stocks.
Medicaid is the US public health insurance programme strictly limited to low-income individuals, while the ACA is a private health insurance marketplace regulated by the government.
The federal enhanced premium tax credits expired at the end of 2025, and the Congress did not renew them. Health insurance shoppers are currently facing double-digit premium increases. A new federal mandate also required “ACA expansion adults” to show proof of 80 hours per month of work, volunteering or education to maintain coverage.
Democrats have mentioned restoring the enhanced credit system to lower these premiums and reduce regulatory hurdles.
Wall Street views this as a potential tailwind, as it reduces the burden of uninsured patients on hospitals while increasing the number of enrollees for insurers.
Jefferies named HCA Healthcare, Tenet Healthcare, Community Health Systems and Acadia Healthcare as hospital stocks that could benefit from a Democratic win.
According to a Bloomberg report, solar stocks are also expected to gain as investors bet that the blue sweep may slow down some of the Trump administration’s measures to stall and restrict clean-energy and renewable projects in favour of traditional fossil fuels. Some clean energy tax credits and subsidies may be restored, as even a few Republicans support them. Asian solar, battery and grid suppliers with US exposure are expected to benefit.
