Markets on Wall Street have fallen as the Democrats gain early momentum in the midterms.

Futures for the tech-heavy Nasdaq 100 index were down 2% as of 3am UK time on Wednesday morning.

Meanwhile, S&P 500 futures fell 1.1% and Dow futures dropped 0.7% - with traders digesting the prospect of a "blue wave" sweeping Washington.

A decisive win for the Democrats could exacerbate volatility in asset prices, especially in the artificial intelligence trade.

Shares in tech giants such as Microsoft, Amazon and Nvidia were all trading lower in extended trading.

The outcome may also have broad implications across the economy - affecting everything from defence spending to the regulation of financial assets.

US midterms - live updates as results come in

Donald Trump's Republican Party has controlled both chambers of Congress during the first two years of his second term.

Opinion polls suggest the Democrats are likely to take the House of Representatives, while the Senate is too close to call.

A Democratic-led Congress could exert greater scrutiny over artificial intelligence companies as public opposition to data centres grows.

Governor races in states such as Texas could also affect ambitious infrastructure projects.

Horizon Investment Services chief executive Chuck Carlson said: "The AI trade has been so important to the market, and ⁠this election will have some direct impact on that."

Concurrent Asset Management's chief investment officer Leah Bennett added: "The market believes most likely the Democrats are going to take Congress."

A so-called "blue wave" would also likely rule out any more business-friendly policies such as tax breaks.

More from Sky News:
Follow the latest in maps and charts

The US elections have weighed heavily on the markets for weeks - as well as concerns that heavy spending on artificial intelligence is yet to provide sufficient returns.

Rising interest rates and sticky inflation, which has been above the Federal Reserve's 2% target for several years, are also playing a factor.

However - in all 20 of the midterm years seen since 1946 - the S&P 500 has been higher 12 months after election day, with an average gain of 14.4%.

Despite the pullback in the early hours of Wednesday, the Nasdaq 100 remains up 12% in the year to date, with the S&P 500 advancing 10%.

Looking ahead, Seth Hickle of Mindset Wealth Management said: "I expect volatility to remain elevated over the next few weeks, regardless of the election outcome."

And Freedom Capital Markets' chief market strategist Jay Woods told Sky's US partner CNBC: "Now all eyes turn to the president and the reaction that we may get from him.

"Will there be contested elections, will there be more uncertainty thrown into the ranks? That's where the market could really get riled up."

(c) Sky News 2026: US midterms: Wall Street falls as results emerge - with broad implications possible