Democrats seize Congress; AMD shares surge - what’s moving markets

 Futures linked to the main U.S. stock averages point higher, as investors assess the impact of a major Democratic victory in the American midterm elections. A large wave of support for Democrats leaves the party set to take control of both chambers of Congress and markets pondering a potential move to decelerate the artificial intelligence build-out. Shares of Advanced Micro Devices surge in extended hours trading on an upbeat outlook powered by strong sales of data-center chips. 

1. Futures climb

U.S. stock futures rose on Wednesday. By 03:37 ET (08:37 GMT), the S&P 500 futures contract had gained 15 points, or 0.2%, Nasdaq 100 futures had jumped by 64 points, or 0.2%, and Dow futures had climbed by 237 points, or 0.5%.

In the prior session, the benchmark S&P 500 and tech-heavy Nasdaq Composite finished higher, while the blue-chip Dow Jones Industrial Average declined. Optimism around a potential diplomatic solution to the Iran war helped to drive down oil prices and push up stocks, although significant uncertainty still surrounds the outlook for the Middle East conflict.

"That backdrop helped US equities to finally stage a recovery" from a recent retreat spurred by worries over the sustainability of massive debt-fueled expenditures on artificial intelligence infrastructure.

Meanwhile, a new batch of data pointed to ongoing strength in the U.S. economy. For example, one tracker showed a jump in job openings to a four-month high, while a separate gauge of factory orders grew by more than anticipated.

2. Democrats seize Congress

Traders were now parsing through the long-awaited U.S. midterms, which saw Democrats secure control over both chambers of Congress.

A wave of backing for Democrats had been suggested by polls in the run-up to the election, as voters expressed frustration with affordability challenges and the Iran war. But that support for the party appears to have been even stronger than anticipated, with Democrats sweeping to victory in some statewide races in traditional strongholds of President Donald Trump's Republicans.

Crucially, the Democrats will hold majorities in the House of Representatives and Senate when Congress convenes in January, meaning that any new laws must require at least a modicum of Democratic approval. Still, Trump retains a critical veto power over legislation, granting the White House the ability to reject bills passed by both the House and Senate.

For markets, expectations have risen that the Democrats could use their Congressional control to place more stringent regulations on AI and slow the build-out of the nascent technology. AI was another key issue for American voters, particularly fears of possible job losses and discontentment with the proliferation of huge data centers.

Overnight, concerns over a decelerating AI rollout temporarily weighed on tech stocks in Asia and U.S. equity futures -- but those losses were later broadly pared back.

"Given AI's role in powering the U.S. economy, speculation over whether a new Democrat Congress would slow AI capex plans briefly hit markets," analysts at ING said in a note. "That the initial market moves are being reversed probably owes to the fact that the Democrats do not take office until January."

3. AMD dented by $1 billion in chip deal charges

Beyond politics, shares of Advanced Micro Devices surged by more than 7% in extended hours trading.

Soaring data-center sales led the AI chipmaker to unveiled 2027 growth that was faster than projected, sparking a after-hours rally in peers like Nvidia, Intel and Broadcom.

In a call with analysts, AMD CEO Lisa Su said overall revenue is now anticipated to expand by over 80% in 2027. According to data cited by Reuters, analysts had been expecting a forecast for growth of 77%.

Su noted that 80% of overall sales will come from chips designed for data centers, adding that these processors will "drive the majority of our revenue and earnings growth."

However, AMD's third-quarter profits were hit by a more than $1 billion non-cash charge related to the firm's strategy of offering warrants to buy future stakes in the business to ChatGPT-maker OpenAI and Instagram-parent Meta Platforms. In return, these companies have committed to buy AMD chips.

More corporate earnings are due out on Wednesday, including returns from chip designer Arm Holdings and semiconductor name Qualcomm.

4. U.S. services activity data ahead

On the economic data front, a new reading of activity in the all-important U.S. services sector will be in focus.

The Institute for Supply Management's non-manufacturing purchasing managers' price index is seen edging down marginally to 54.8 in October, compared to 54.9 in the preceding month.

A level above 50 indicates expansion in the services industry, which accounts for over two-thirds of total U.S. economic activity.

Earlier this week, an ISM gauge of U.S. manufacturing activity increased thanks to solid domestic demand, although factory gate prices stayed elevated, underscoring ongoing inflationary pressures facing the industry.

5. Oil rises amid Iran uncertainty, Democrat triumph

Oil prices edged higher on Wednesday. As of 01:57 ET (06:57 GMT), Brent Oil Futures expiring in January rose 0.6% to $104.20 per barrel, while West Texas Intermediate (WTI) crude futures gained 0.5% to $96.59 per barrel.

The U.S. midterm election outcome could complicate the Trump administration’s policy agenda during a time when uncertainty surround whether the White House will pursue renewed military action against Iran or seek a diplomatic resolution.

Trump’s conflicting signals have added to this murky backdrop. The United States carried out what officials described as defensive strikes against Iranian air defense installations on Qeshm Island, near the Strait of Hormuz, earlier this week. Trump said Washington had no immediate plans for further strikes.

Tehran and Washington are reviewing fresh proposals from mediators aimed at bridging their differences and preventing a return to all-out war, Bloomberg News reported, citing a diplomat briefed on the matter.

Iran, however, said the U.S. response to its conditions for reopening the Strait of Hormuz was unsatisfactory. Qatar has stepped up mediation efforts, with both sides continuing to exchange proposals, but a senior Iranian official told Reuters that the two countries remained far from an agreement.

Democrats secured majorities in both the House of Representatives and Senate, delivering a setback to Trump for the remainder of his second term.