US stock futures were little changed as Americans headed to the polls on Election Day, with control of both chambers of Congress at stake and investors weighing mounting risks to the artificial intelligence trade. S&P 500 futures were muted, while Nasdaq 100 contracts rose 0.3% as of 7:30 a.m. in New York, clawing back earlier losses. Technology shares attempted a tentative rebound a day after entering a correction.
Polymarket is pricing roughly a 95% probability of Democrats taking the House of Representatives and about a 77% chance of a Senate victory, pointing to a potential sweep of both chambers. History, however, has generally favored stocks after midterm elections. Large-cap equities have gained about 15% on a market-cap-weighted basis in the six months after midterms since 1982, according to Morgan Stanley. Tom Essaye, founder of The Sevens Report, noted that since 1950 the S&P 500 has never been lower 12 months after a midterm election.
Investor positioning suggests caution is building. Investors added a further $9.6 billion in net new short positions in S&P 500 futures last week, bringing overall positioning close to neutral, according to Citigroup strategists. Concerns about the sustainability of AI spending are also adding to the unease. As tech heavyweights increasingly turn to bond markets to finance their AI investments, Pacific Investment Management Co. Chief Executive Officer Emmanuel Roman and Bain Capital Chair John Connaughton are among those flagging the possibility of a downturn.
Apple Inc. added to the pressure after its latest quarterly results disappointed on several key metrics, including revenue in China. Shares slipped nearly 4% before market open. Still, market leadership is broadening, with energy and defensive sectors offsetting losses in tech. Companies representing about 70% of the S&P 500's market capitalization have reported third-quarter results, with 84% beating earnings estimates.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing