U.S. stocks fell on Wednesday after Democrats won control of both chambers of Congress. Nasdaq 100 futures fell more than 2.8% overnight before paring losses, leaving the S&P 500 down 0.3% and the Nasdaq 100 0.7% lower.
The selling focused on AI stocks, as investors worry that a Democratic Congress could bring tighter regulation of Big Tech and AI infrastructure, along with tougher fiscal negotiations. According to analysts, Texas alone accounts for about 27% of planned U.S. data centre capacity, with Georgia (7%), Ohio (5%) and Pennsylvania (5%) also holding key gubernatorial or legislative races where Democrats campaigned on data centre moratoriums. Still, Trump retains his veto power, and Democrats cannot override it without Republican votes.
Earnings offered some support. AMD reported third-quarter EPS of $2.09 on revenue of $13.38 billion, above estimates, with data centre revenue up 97% to $8.5 billion. The shares rose about 5% after hours. McDonald’s, Qualcomm and Uber report today, and investors will also watch services data and Friday’s October jobs report. History may offer some comfort: the S&P 500 has risen in the 12 months after all 19 midterm elections since 1950.
On the chart, the S&P 500 opened below its 100-day EMA located at 7,593. Immediate support can be located at 7,476. A break lower would expose 7,447. Resistance stands at 7,626 near the 9-day SMA.
The Nasdaq 100 recovered above the 200-day SMA. Immediate support lies near previous-day lows at 27,492. On the upside, resistance is at 28,392, followed by 28,634.
Gold and Silver
Gold rebounded sharply by 2.46% to $4,026 on Wednesday, supported by a weaker U.S. dollar and falling Treasury yields following key Democratic victories in the midterm elections. The prospect of congressional gridlock could restrict further tax cuts and fiscal expansion, potentially reducing future government borrowing and Treasury issuance. This, alongside safe-haven demand for bonds, has weighed on yields and strengthened gold’s appeal. Investors are also likely to demand protection from a potentially more unpredictable and confrontational Trump administration, which could spur safe-haven demand for the precious metal. Traders will also keep an eye out for the NFP data due later this week, alongside geopolitical headlines, as inflationary pressures have resulted in a 79% possibility of an interest rate hike at the December FOMC meeting. Nonetheless, the near-term sentiment towards gold appears to be improving, particularly as the precious metal has recovered above the June-July lows. The rebound is particularly significant given gold’s nearly 7% decline in October, when a selloff in AI-related equities triggered broader portfolio liquidations, forcing investors to sell bullion to cover losses elsewhere and pushing prices below $4,000 per ounce. Gold, which is currently trading at $4,026, has strong psychological support at $4,000, a level roughly aligning with recent trend-based Fibonacci extension supports. The rally could face initial resistance around $4,040, with the next resistance around $4,082. Any corrective dips to $3,975 level would likely be perceived as buying opportunities, with the next support lying around $3,950.
Silver shot up 3.88% to $51.73, rebounding from the key horizontal support around $48.42, which marked the 2011 highs. This could potentially represent an important turning point for the metal if it sustains above this level. Support lies around $50.50 and $49.17, while 200-EMA resistance lies around $52.29 on the 1-hour chart. Silver’s recovery remains vulnerable to a hawkish monetary policy outlook. However, underlying supply constraints offer some support. According to the Silver Institute, the market is projected to record a sixth consecutive annual deficit of 46.3 million ounces in 2026, with cumulative inventory drawdowns reaching 762 million ounces since 2021. Investment demand is also strengthening, with physical coin and bar purchases forecast to rise 18%, partially offsetting a 3% decline in industrial consumption.
Crude Oil
Oil prices ended yesterday’s session marginally higher as investors gauged the impact of the mid-term elections. In today’s session, it is holding steady as market participants weigh mixed signals on the trajectory of US-Iran peace talks. Tehran and Washington are reviewing mediators’ proposals to resolve their differences, but Iran’s security chief said on X that the US response was not satisfactory. The broader outlook still favours oil. Global benchmark Brent has surged more than 70% this year as the nine-month war disrupted flows from the Persian Gulf and upended energy markets. Further, the American Petroleum Institute reported that US crude inventories declined by 5.3 million barrels last week. If official data confirms it today, that would mark a fifth weekly decline.
Technically, WTI is trading at $97.07 and is holding the 50-day SMA support at $95.97. It is also holding the parallel channel connecting the lows of $67.95, $80.29, and $90.42, and the highs of $94.49 and $106.96. The 5-period RSI is oversold on the daily and bouncing back higher on the 4-hour timeframe. The near-term upside level to monitor is $100.3. Meanwhile, a recovery and a daily close above $101.63 will indicate further bullishness toward $106.13. Conversely, the bullish thesis is invalidated if WTI closes below $94.51, with the next support at $90.
Technically, Brent is trading at $108.17 and is holding the 50-day SMA support at $107.27. The 5-period RSI is oversold on the daily chart, indicating a bounce back higher is possible. The near-term upside level to monitor is $111.44, followed by the recently created $119.5 high. Conversely, the bullish thesis is invalidated if Brent closes below $104.59, with the next support at $98.95.
U.S. Dollar Index
The U.S. Dollar Index is facing renewed selling pressure, falling towards 101.50 during Wednesday’s Asian session as early US midterm election results point towards a potential Democratic sweep of Congress. Markets are increasingly positioning for Democrats to gain control of both the House and Senate, raising the prospect of political gridlock in Washington. Such an outcome could constrain the Trump administration’s fiscal agenda and limit government spending, weighing on US Treasury yields and the dollar. The euro has strengthened towards 1.1228, while the yen has also gained, reflecting broader weakness in the greenback.
Beyond the immediate political implications, a Democratic-controlled Congress could introduce greater scrutiny of AI-related investment and data-centre expansion, potentially challenging one of the key drivers of US growth and equity market performance. Concerns over the sustainability of massive AI capital expenditure could encourage investors to reassess their exposure to US equities and corporate credit, creating additional downside risks for the dollar. The decline in the 10-year Treasury yield towards 4.93% further reflects this cautious sentiment.
However, persistent geopolitical risks surrounding the US-Iran conflict and expectations of another Fed rate hike in December, currently priced at over 79% by futures markets, may provide some support. Attention also remains on Friday’s nonfarm payrolls report, which could influence the Fed’s tightening outlook.
Overall, election-driven uncertainty, falling Treasury yields and concerns over the sustainability of AI-led growth are likely to keep the dollar under pressure. The near-term bias remains bearish, although geopolitical developments and upcoming US data could trigger intermittent rebounds.
Technically, DXY is trading below the 20 EMA at 101.80, which now acts as immediate resistance. Support is seen at 101.27 (50 EMA), and a break below this level could extend downside momentum. Meanwhile, EUR/USD retains its bullish trend, with immediate support near 1.118 and resistance positioned around the 50-day EMA at 1.131
