EL7.AI
Macro EconomyMedium•4 November 2026•
4 min read

U.S. Futures Recover After Overnight Drop of 2% Following Midterm Elections

Key Facts

1U.S. futures returned to positive territory after an overnight drop of 2%.
2The 10-year Treasury yield fell 3 basis points to 4.92%, after dropping to 4.89% overnight.
3S&P 500 and Dow Jones futures rose 0.2% and 0.4%, respectively, on the morning of November 4.
4The MSCI World Index rose 0.13% and the STOXX 600 gained 0.5% in European trading on the morning of November 4.

U.S. futures and global stocks recovered on Wednesday morning, November 4, after futures fell as much as 2% overnight, according to Reuters. Futures returned to positive territory as results from the U.S. midterm elections emerged. S&P 500 and Dow Jones futures rose 0.2% and 0.4%, respectively, according to the Associated Press. In Europe, the MSCI World Index rose 0.13% and the STOXX 600 gained 0.5% in morning trading. The turn came as the results became clearer, while investors focused on their implications for U.S. policy.

The yield on 10-year U.S. Treasuries recovered some of its overnight losses but remained lower in Wednesday trading. Reuters said the yield fell 3 basis points to 4.92%, after dropping as much as 6 basis points overnight to 4.89%. The news agency attributed demand for bonds to investors’ expectations that political gridlock in Washington would lead to lower government spending. The report also pointed to the possibility that artificial intelligence rules could constrain economic growth and reduce the need for interest-rate increases. This reflects investors trading potential implications for spending and growth while digesting the election results.

Investors generally favor control of Washington being split between the two parties, as this may limit sweeping policy shifts, according to the Associated Press. Deborah Cunningham of Federated Hermes said divided government usually creates obstacles to new legislation. She added that traditional financial markets view this as favorable because it reduces variables. But Stephen Brown of Capital Economics said the result does little to change near-term policy expectations. He explained that Democrats lack a filibuster-proof majority in the Senate, and President Donald Trump can use his veto to block legislation. As a result, the new majority’s ability to enact sweeping changes remains constrained by these institutional factors.

On the electoral front, Reuters said Democrats won a Senate seat and ousted Republican Texas Governor Greg Abbott, who had served three terms. Voters in Kansas also elected the state’s first Democratic senator since the Great Depression. Reuters linked Democratic gains to discontent over the war with Iran, concerns about the cost of living, and anger at the Trump administration’s handling of the country. These factors put the election result in the context of objections to the war, the economy and the administration’s performance. Kathleen Brooks of XTB said the market impact of the results had been limited up to that point. She added that investors’ focus would shift from uncertainty over the election outcome to what it means for policy.

Futures gains followed Tuesday’s session, which saw mixed performance on Wall Street. The S&P 500 rose 0.4%, despite declines in most of its listed stocks, while the Nasdaq Composite gained 0.8%. The Dow Jones fell 0.4%. Nvidia and Broadcom were among the biggest contributors to the S&P 500’s rise, while Microsoft, Amazon and Meta shares each gained more than 2%. The Associated Press reported that investors were concerned about elevated valuations for artificial intelligence stocks, which had triggered waves of selling in technology shares. In Wednesday’s Asian session, the Hang Seng rose 1.5% and the Shanghai Composite gained 2.2%, while the Nikkei fell 1.4%.

Bond yields moved in the opposite direction during Tuesday’s session, before the decline recorded on Wednesday. The 10-year U.S. Treasury yield rose to 4.96% from 4.91% late Monday, after a labor-market report showed employers had advertised more job openings than economists expected at the end of September, according to the Associated Press. By contrast, Wednesday’s data showed the yield falling to 4.92%, according to Reuters. The U.S. October employment report is due on November 6 at 08:30 a.m. local time, according to the U.S. Bureau of Labor Statistics schedule. The report is among the next economic data releases investors will assess after the election. Brooks also said markets would move on to trading the political implications of the results after focusing on uncertainty about them.