The Democratic Party has seized full control of Congress, opening a new chapter in Washington politics, while Wall Street appears willing to focus on economic growth fundamentals. Stocks rallied, Treasuries climbed across the board, and the dollar weakened. Notably, shares tied to Trump and Republican mega-donor Musk fell sharply.

As of Wednesday morning, the latest results showed Democrats had won at least 228 House seats, far above the 218 needed for a majority. Another 68 races remain undecided. NBC News projects Democrats could ultimately secure 258 seats, an 81-seat advantage over Republicans. In the Senate, Democrats will hold at least 54 seats, with only Alaska and Mississippi still unclear. This is a midterm victory of a kind neither party has experienced in two decades, breaking Republican control of Washington. The outcome means Trump will face far greater constraints than during the first half of his second term.

Aftermath of the Vote

People familiar with the matter said that after the Republican midterm defeat, House Speaker Michael Johnson does not intend to serve as minority leader. The contest could unfold between House Republican No. 2 Steve Scalise and House Judiciary Committee Chairman Jim Jordan. Scalise of Louisiana is an establishment conservative, while Jordan is a hardline, combative figure who has long aspired to lead Republicans. In addition, House Republican No. 3 Tom Emmer of Minnesota may also join the race. In Ohio, Vice President JD Vance's home state and political base, Democrats won both the federal Senate and governor's races. In a social media post on Wednesday, he said the Iran war, inflation, and the US relationship with Israel were reasons voters abandoned Republicans. "Everyone knows why we lost," he wrote.

The Democratic comeback also erects a powerful barrier to Trump's attempt to reshape the Federal Reserve and make interest-rate policy bend to his will. The shift in Senate control is a major political turn, effectively blocking the White House's path to confirming Trump loyalists to the Fed's Board of Governors and depriving the Trump administration of its most direct means of further tightening control over the US central bank. Massachusetts Senator Elizabeth Warren may become chair of the Senate Banking Committee. That means the committee overseeing the Fed would be led by her, and she is expected to block any nominee seen as excessively submissive to pressure from the executive branch.

US Stocks and Bonds

The S&P 500 rose as much as 1.9%, heading for its biggest single-day gain in three months. Most tech giants advanced, and the small-cap index rose 2%. Treasury yields fell across the curve, the dollar weakened against all developed-market currencies, gold broke above $4,000 an ounce, and oil declined. Investors now appear more willing to bet that major US growth drivers such as consumer spending and the artificial intelligence investment boom will remain intact. At the same time, checks and balances in Washington could limit further fiscal expansion, easing pressure on the bond market and providing support for stocks. The Nasdaq 100 surged as much as 2.3%; the Magnificent Seven tech index jumped 3.5%, heading for its biggest single-day gain since August; Amazon.com (AMZN) rose as much as 8.3%, while Microsoft (MSFT) and Apple (AAPL) each gained more than 6%, Alphabet (GOOGL) rose 5.8%, and Meta Platforms (META) rose 3%; Tesla Motors (TSLA) was the worst performer among the Magnificent Seven, falling as much as 5.8%, as investors worried that the core assets of Republican mega-donor Elon Musk would be affected; SpaceX also plunged as much as 5.8%; Nvidia fell 1%; Trump's Trump Media & Technology (DJT) tumbled more than 12% to its lowest level since listing; Freddie Mac (FMCC) and Fannie Mae (FNMA) each plunged as much as 27%, with investors worried that the path to ending government conservatorship would be hindered by Democrats; US stocks often rebound after midterm election results become clear. Data compiled since 1950 show the S&P 500 has posted positive returns in the 12 months after every midterm election, with an average gain of about 15% during those periods.

US Stocks Typically Strengthen After Midterms

The S&P 500's average return in the 12 months after a midterm election is 15%.

CoreWeave Inc. bonds fell sharply on Wednesday, with some prices hitting new lows, after several Democrats who advocate slowing data-center construction won governor's races, including in Texas. Trace pricing data showed the AI cloud provider's unsecured bonds maturing in 2031 were the worst performers among high-yield issuers on Wednesday, with prices falling as low as 79.5 cents on the dollar. The company's 2030 and 2032 bonds also declined, with prices now hovering at levels widely seen by the market as indicating financial distress, with yields above 15%.

Bitcoin

Bitcoin rose as much as 3.9% to about $80,800. Full Democratic control of Congress could block legislation backed by the crypto industry and invite more regulatory scrutiny, but political gridlock could push down US Treasury yields, thereby supporting risk assets. In pre-election surveys, 55% of respondents said that if Democrats fully controlled Congress, Bitcoin would fall but remain above $60,000. Another 16% expected it to drop below $60,000.

Oil Prices

Brent crude futures fell below $100 a barrel for the first time since early October. After the decisive Democratic victory, Trump played down the possibility of striking Iran again. At 11 a.m. New York time, Brent crude futures for January delivery settled down 4.4% at $99.10 a barrel. December WTI fell 4.3% to $91.91 a barrel.