U.S. stock futures dropped sharply after Democrats scored key midterm victories and the Fox News Decision Desk projected that the party would control both chambers of Congress. The immediate reaction put Washington politics squarely at the center of Wall Street’s attention, as reported by Fox Business.

Futures tied to the S&P 500 fell 1.3%, while Nasdaq-100 futures sank 2.2%. Contracts linked to the Dow Jones Industrial Average declined 0.8%, completing a broad retreat across the major U.S. equity benchmarks.

The Fox News Decision Desk projected that Democrats would control the House of Representatives. It also projected that the party would gain control of the U.S. Senate following victories in pivotal congressional contests across the country.

The results added another dose of uncertainty for investors already weighing the consequences of a major shift in Washington’s balance of power. Wall Street did not exactly greet the prospect of unified Democratic congressional control with confetti.

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Investors were examining what the shift could mean for taxes, government spending, artificial intelligence, Big Tech, defense, health care, banking and cryptocurrency regulation. Each of those areas could be affected by the direction lawmakers take in the next Congress.

Charu Chanana, chief investment strategist at Saxo in Singapore, described how traders appeared to be interpreting the results. She told Reuters, “Markets appear to be pricing in the possibility of a stronger-than-expected Democratic showing, which could reduce expectations for further fiscal stimulus.”

Prediction markets had increasingly pointed toward Democratic control of both chambers as election results arrived. More than $1.48 billion had been wagered on the midterm elections, reflecting the intense interest surrounding control of Congress.

Chanana said investors could be worried that Democratic control would bring increased regulatory scrutiny of artificial intelligence and Big Tech. Those concerns come as investors question lofty valuations and rising spending related to artificial intelligence.

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The market strategist also pointed to a factor that could eventually ease some of the pressure on stocks. “However, lower Treasury yields could eventually provide some relief, so the initial selloff may not necessarily be sustained,” she said.

The benchmark Treasury yield for 10-year notes fell 6 basis points to 4.906%. That decline unfolded as stock futures weakened and investors continued assessing the election outcome and its potential implications for fiscal and regulatory policy.

The U.S. dollar also lost ground during the market reaction. Both the euro and the British pound gained against the dollar, while the dollar index declined 0.32%.

The weakness was not confined to U.S. futures or the dollar. Overseas markets also moved lower, with Japan’s Nikkei falling 3% and South Korea’s KOSPI dropping 1.6%.

A broad index tracking stocks across the Asia Pacific region outside Japan declined 0.5%. The international losses added to the gloomy market picture as investors watched political developments in the United States.

Historical performance, however, offers a more measured view of what congressional power shifts have meant for stocks. Changes in control of Congress have not historically derailed the market, according to the data cited in the report.

The S&P 500 rose through the end of the year in five of eight midterm election cycles since 1930 when the president’s party lost the House, according to Ned Davis Research. That record suggests the first market reaction has not always determined the longer-term direction.

The latest market moves nevertheless showed the immediate unease surrounding the Democratic victories. With control of the House and Senate projected to change hands, traders quickly turned their attention toward spending, taxes and the possibility of tougher regulation.

Artificial intelligence and Big Tech were especially prominent in that assessment because of concerns about valuations and growing spending. Banking, health care, cryptocurrency and defense were also among the sectors investors were evaluating as the new congressional outlook took shape.

For the moment, the numbers offered a blunt verdict on the initial reaction. Stock futures fell, Treasury yields declined, the dollar weakened, and major Asian markets retreated as Democratic control of Congress came into view.

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