Nasdaq Futures Fall 1.8% as Markets Await U.S. Midterm Election Results

Key Facts

Nasdaq futures fell 1.8% in early Wednesday trading, while S&P 500 futures dropped 0.8% as markets awaited the results of the U.S. midterm elections. Reuters linked the move to early Democratic wins in two Senate races, bolstering bets that the party could take control of the chamber. The final outcome remained undecided, while caution also spread to bond and currency markets. In the previous session, the Nasdaq Composite rose 0.8% on Tuesday, despite a 0.4% decline in the Dow Jones. The divergence between the two sessions highlights a shift in focus from stock trading to the political landscape’s impact on economic policy expectations and regulation-sensitive sectors.

A Saxo investment strategist said markets "seem to be pricing in a stronger-than-expected Democratic performance," which could reduce expectations for further fiscal stimulus. The assessment comes as markets track the possibility of a change in the balance of power in Congress, while final results remain pending. Reuters reported that concerns about tighter oversight of artificial intelligence and major technology companies contributed to Nasdaq futures falling more sharply than S&P 500 futures. The sector also faces questions about company valuations and heavy spending on AI. Stephen Innes of SPI Asset Management said AI trades may have to contend with political concerns involving politicians who control the power grid.

The move extended to the bond market, where the yield on the 10-year U.S. Treasury fell 6 basis points to 4.906% in early trading. The decline in yields accompanied investors’ reassessment of the political landscape and the prospects for government spending. In Asia, Japan’s Nikkei fell 3.6% to 60,835.36 points in Wednesday trading, while South Korea’s Kospi dropped 3.2% to 5,466.83 points. The Nasdaq 100 closed at 28,180.26 points on November 3, while Apple shares ended the session at $331.9. These moves put U.S. market performance in the broader context of declines in Asian stocks on the same day.

Apple shares fell in the previous session even though the company reported quarterly earnings and revenue that beat analysts’ expectations; the stock dropped 1.9% on Tuesday. Net income was $30.71 billion, or $2.10 a share, in the July-to-September quarter, up 12% from the same period a year earlier. Revenue also rose 12% to $114.5 billion, exceeding the average analyst estimate of $113.4 billion. Pressure on the stock was linked to margin concerns amid higher memory-chip costs, rather than quarterly figures falling short of expectations. Strong quarterly results therefore did not stop investors from focusing on the company’s cost outlook for the next quarter.

Apple forecast a gross margin of between 45% and 46% for the December quarter, compared with 47.9% in the fourth fiscal quarter, amid the impact of memory costs and expenses to develop AI-powered Siri. Chief Executive John Ternus said the memory pricing environment was "unprecedented," and expected costs to continue rising beyond the quarter ending in December. That puts margin expectations at the center of investors’ focus on the stock after the results, alongside the broader debate over AI spending. This factor presents a challenge specific to Apple in a session that also saw technology stocks sensitive to the prospect of tighter political oversight. Attention in the next trading sessions will turn to the impact of election results on expectations for regulation and fiscal stimulus, alongside the path of the company’s costs.