Goldman Sachs, Deutsche Bank Tie Futures Rebound to Hedge Closures

U.S. stock futures reversed an election-night slide after midterm election results came in, as Goldman Sachs and Deutsche Bank analysts tied the rebound to investors closing pre-election hedges and lower political risk premiums.

Democrats regained control of the House and Senate. Nasdaq-100 futures fell 2.4% during election night, then turned to a 0.9% gain, recovering about 929 points from the session low. S&P 500 futures gained about 1%, while Dow futures rose roughly 700 points.

The banks attributed much of the recovery to investors unwinding hedge positions established before the vote once the results became clear. They also pointed to lower political uncertainty and a smaller risk premium in the market.

Goldman Sachs separately said valuations in AI infrastructure had already contracted significantly and that lower near-term volatility could support stocks. Concerns about the sector’s investment outlook remained.

Texas Gov.-elect Gina Hinojosa said she would keep a freeze on data center construction permits until a broader regulatory framework is in place. The freeze could delay several gigawatts of computing capacity scheduled to come online in 2027 until 2028.

Deutsche Bank also identified a possible U.S. debt ceiling issue in the second quarter of 2027. Whether Republicans adjust the limit before the new Congress convenes in January could affect uncertainty around fiscal policy.