Futures partially retraced morning losses as investors digested midterm results. In the session yesterday, the S&P 500 gained about 0.4%, and the Nasdaq 100 rose by 0.7%, clawing back some of Monday's sell-off that pushed the tech index into a correction.

Democrats secured control of both chambers of Congress, with surprise Senate wins in Kansas and South Carolina. They also won governorships in Georgia and Texas, including an additional Senate seat in Texas. Treasuries rallied on expectations that the new political configuration would constrain the Trump administration's tax and spending agenda.

The dominant market worry is AI regulation. Investors fear a Democratic-controlled Congress will subject AI infrastructure and services to stricter oversight, and hostile state governors could slow data center development. Texas is a focal point: it houses roughly one-third of US AI capacity, and around 250 projects are planned. Many analysts, however, argue the reaction has been somewhat overdone because the direct impact of midterms on near-term profits is limited — the market may simply be going through a cleansing move.

Note that earnings have offered partial relief. AMD, after the close on Tuesday, raised revenue guidance above analyst estimates, signaling sustained demand for data-center processors. Super Micro Computer also guided current-quarter revenue above estimates and raised its full-year sales outlook.

History favors bulls after midterms. Morgan Stanley's study since 1982 shows that large caps gained roughly 15% in market cap on average and equal-weighted returns of about 16% in the six months post-midterms — and roughly 22% over the following year. UBS notes that favorable seasonality and low hedge-fund net long positions set the stage for a year-end rally.

Geopolitics remains a background risk. Diplomacy toward Iran continues. Reports indicate that mediators are circulating proposals, although limited US strikes reportedly hit targets on Iran's Qeshm Island overnight. US President Donald Trump said Washington has no immediate plan to strike Iran. Oil is trading off recent lows, with Brent near $104/bbl and WTI around $97, while gold bounced on a softer dollar and lower yields, trading above $3,960/oz intraday and around $3,942/oz in Asian trade.

All this indicates that the elections have removed a major source of political uncertainty but raised new questions for the AI sector, and the market is trading cautiously. With supportive reports from AMD and Super Micro, I think the tech sell-off is likely to be limited, though the near-term direction will hinge on Friday's employment numbers and Iran-related developments.

As for S&P 500 technicals, the immediate task for buyers is to overcome the resistance level of $7,574. That would signal upside and open the way to $7,607. Taking control of $7,633 would further strengthen buyers' positions. In case of a downside move amid fading risk appetite, buyers should step in near $7,544. A break below that level would likely push the index to $7,518 and open the path to $7,495.