Wall Street wobbles, then recovers after Democratic sweep
Dubai: US stock futures lurched lower, then recovered on Wednesday after Democrats won control of both chambers of Congress. Markets were quick to react, with the Nasdaq taking a hit initially with AI and tech stocks breaking the brunt of the outcome. Nasdaq 100 futures dropped as much as 2.4 per cent and S&P 500 futures fell 1.4 per cent in early trade. Both pared the losses as investors bought…
On Wednesday, US stock futures initially plummeted before bouncing back after Democrats claimed victory in both chambers of Congress. The Nasdaq 100 futures dropped 2.4% and S&P 500 futures slipped 1.4% in early trading, but both recovered as investors took advantage of the dip. President Donald Trump endorsed the results, which helped alleviate some uncertainty among traders.
The 10-year Treasury yield fell to around 4.9%, down from a 24-year high of 5.3% the previous day, while the dollar weakened to a one-month low. Asian markets suffered more significant losses as votes were still being counted. Japan's Nikkei fell almost 3%, and SoftBank declined 8%. European markets initially pointed lower before rebounding.
Economists remain cautious, anticipating tighter monetary policy and AI investment could support the dollar, but uncertainty over future taxes and regulation may pressure valuations. They foresee a potential "gridlock premium" due to the election outcome and suggest investors should adopt a diversified portfolio. Analysts warn that a divided government might limit policy changes, but a more diversified mix of earnings drivers, valuations, and sector exposures could help mitigate risks.
Written by urgent.news from Gulf News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
