NEW YORK: Investors were bracing for a potentially strong Democratic showing during Tuesday's midterm elections that could pave the way for greater volatility in asset prices, particularly the AI trade, which has been a main driver for stocks.

Tuesday's outcome could hold broad implications for market-sensitive areas including the AI data-center buildout, the US fiscal outlook, defense spending and regulation in areas such as healthcare, banking and cryptocurrencies.

President Donald Trump's Republican Party has controlled both chambers of Congress during the first two years of his second term. Opinion polls show the Democrats are likely to take the House, while the Senate is too close to call.