Democrats have taken control of the House of Representatives after they won the Senate late Tuesday night, constricting President Donald Trump's power and likely queuing up congressional investigations into the White House and into the companies that have supported his agenda.
As of early Wednesday, Democrats have won 228 House seats, taking them past the 218 needed for a majority. They have also won Senate races not just in perennial battlegrounds like Ohio and North Carolina but also in Texas and South Carolina, which hadn't elected Democrats to statewide office in decades. Betting markets like Kalshi had Democrats as the overwhelming favorites for most of the night. Before midnight, the AP called the Senate for Democrats and later called the House majority for Democrats.
Investors initially reacted poorly to the sweep before sentiment turned positive. In the Wednesday premarket S&P 500 futures were rising 0.5%, while tech-heavy Nasdaq futures were rising 0.4%. Dow futures were rising 0.9%, or 487 points.
Trump tried to distance himself from the defeat on Tuesday.
"I wasn't on the Ballot and if I was, we would have won IN A LANDSLIDE!" Trump wrote in a post on Truth Social.
Whether that is true is far from clear. Heading into the election, Trump had some of the lowest poll numbers of his political career. Voters blamed him and his party for their rising cost of living, the Iran war, and higher gas prices. The consequence will be that Trump will soon be unable to get legislation passed without help from Democrats.
Democrats are also poised to launch a bevy of investigations into Trump and the companies that have supported him. Democrats in the House and Senate have said they want to call hearings with executives from banks, crypto firms, insurance companies, pharmaceutical makers, and AI companies. Some of those companies supported Trump's projects like the construction of the White House ballroom and could become punching bags leading up to the 2028 presidential election.
The results are also bad news for data centers and the AI industry, which have been supported by Trump and became a central target of many successful Democratic campaigns. Democratic victories included Gina Hinojosa, who won the Texas governor's race and has said she wants to extend a moratorium on new data-center construction. Democrats also won two races for seats on a public service commission in Georgia, potentially limiting the AI-related profits of utility Southern Co.
The results of some important ballot initiatives weren't known as of Wednesday morning, including the fate of several state and local measures to restrict data-center construction, a proposed wealth tax on billionaires in California, and a measure to repeal a tax on income exceeding $1 million in Washington state. The Alaska Senate race, which had been seen as a potential tipping point before the Democratic rout, might not be called for days or even weeks.
But, at this point, the remaining races will only matter for Democrats' margin of victory. The era of unified GOP control under Trump is over.
Write to joe.light@barrons.com.
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