Republican Cruz bests Trump in Iowa race, Clinton edges out Sanders

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How Clinton and Sanders Tied in the Iowa Caucuses, in 60 Seconds

DES MOINES, Iowa, Feb 2 (Reuters) - U.S. Senator Ted Cruz soundly defeated billionaire Donald Trump in Iowa's Republican nominating contest on Monday, upending the party's presidential race and creating a three-way competition with establishment candidate Senator Marco Rubio.

On the Democratic side, officials said former Secretary of State Hillary Clinton had won by a razor-thin margin against U.S. Senator Bernie Sanders of Vermont, the closest in Iowa Democratic caucus history.

Cruz, a conservative lawmaker from Texas, won the first state Republican contest in the 2016 race with 28 percent of the vote compared with 24 percent for businessman Trump. Rubio, a U.S. senator from Florida, came in third with 23 percent, making a stronger-than-expected finish.

With Democrat Clinton prevailing by only four delegates, according to party figures, Sanders, a self-described democratic socialist, declared the result a "virtual tie."

"Hillary Clinton has won the Iowa Caucus," Matt Paul, the Iowa state director for Clinton said in a statement released in the early hours of Tuesday morning.

See the candidates in Iowa as Cruz and Clinton celebrate victories:

26 PHOTOS
Iowa Caucus candidates speaking, Clinton and Cruz celebrate
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Republican Cruz bests Trump in Iowa race, Clinton edges out Sanders
Republican presidential candidate, Sen. Ted Cruz, R-Texas, speaks during a caucus night rally as his wife Heidi listens Monday, Feb. 1, 2016, in Des Moines, Iowa. Cruz sealed a victory in the Republican Iowa caucuses, winning on the strength of his relentless campaigning and support from his party's diehard conservatives. (AP Photo/Chris Carlson)
Democratic presidential candidate Hillary Clinton, accompanied by former President Bill Clinton and their daughter Chelsea Clinton speaks at her caucus night rally at Drake University in Des Moines, Iowa, Monday, Feb. 1, 2016. (AP Photo/Andrew Harnik)
Democratic presidential candidate, Sen. Bernie Sanders, I-Vt, and his wave Jane acknowledge the crowd as he arrives for his caucus night rally in Des Moines, Iowa, Monday, Feb. 2, 2016. (AP Photo/Patrick Semansky)
Republican presidential candidate, businessman Donald Trump blows a kiss after speaking at his caucus night rally, Monday, Feb. 1, 2016, in West Des Moines, Iowa. (AP Photo/Jae C. Hong)
Republican presidential candidate Sen. Marco Rubio, R-Fla., and his family pray during opening of a caucus site, Monday, Feb. 1, 2016 in Clive, Iowa. (AP Photo/Paul Sancya)
Republican presidential candidate, Sen. Ted Cruz, R-Texas, speaks during a caucus night rally, Monday, Feb. 1, 2016, in Des Moines, Iowa. (AP Photo/Charlie Neibergall)
Hillary Clinton, former Secretary of State and 2016 Democratic presidential candidate, left, embraces her husband Bill Clinton, former U.S. President, center, as their daughter Chelsea Clinton looks on during a caucus night party in Des Moines, Iowa, U.S., on Monday, Feb. 1, 2016. Senator Ted Cruz of Texas won the Iowa Republican caucuses in an upset over billionaire Donald Trump, while Clinton was clinging to the narrowest edge over Senator Bernie Sanders of Vermont. Photographer: Daniel Acker/Bloomerg
Supporters cheer for Republican presidential candidate, Sen. Ted Cruz, R-Texas, during a caucus night rally, Monday, Feb. 1, 2016, in Des Moines, Iowa. (AP Photo/Charlie Neibergall)
Republican presidential candidate, Sen. Ted Cruz, R-Texas, speaks during a caucus night rally, Monday, Feb. 1, 2016, in Des Moines, Iowa. (AP Photo/Charlie Neibergall)
Republican presidential candidate Donald Trump speaks during a campaign event, Monday, Feb. 1, 2016, in Cedar Rapids, Iowa. (AP Photo/Mary Altaffer)
Donald Trump, president and chief executive of Trump Organization Inc. and 2016 Republican presidential candidate, right, blows a kiss as he walks off stage with his family during a caucus watch party in West Des Moines, Iowa, U.S., on Monday, Feb. 1, 2016. Republicans looking for a candidate who could stop Trump found one on Monday evening, as U.S. Senator Ted Cruz emerged from a brutal campaign with a victory in the first-in-the-nation caucuses. Photographer: Patrick T. Fallon/Bloomberg via Getty Images
Democratic presidential candidate Sen. Bernie Sanders, I-Vt., smiles during a caucus night rally on Monday, Feb. 1, 2016, in Des Moines, Iowa. (AP Photo/Evan Vucci)
DES MOINES, IA - FEBRUARY 01: Supporters cheer during Democratic presidential candidate Sen. Bernie Sanders' (I-VT) caucus night party February 1, 2016 in Des Moines, Iowa. Sanders and former Secretary of State Hillary Clinton were locked in a tight race with caucus goers late in the evening. (Photo by Alex Wong/Getty Images)
Republican presidential candidate Sen. Marco Rubio, R-Fla., lifts his son Anthony, 10, at a caucus night rally, Monday, Feb. 1, 2016, in Des Moines, Iowa. (AP Photo/Paul Sancya)
Senator Ted Cruz, a Republican from Texas and 2016 presidential candidate, greets supporters after being declared the winner of the Iowa caucus during his campaign's caucus night celebration at the Elwell Center on the Iowa State Fairgrounds in Des Moines, Iowa, U.S., on Monday, Feb. 1, 2016. Cruz won the Iowa Republican caucuses in an upset over billionaire Donald Trump, while Democrat Hillary Clinton was clinging to the narrowest edge over Senator Bernie Sanders of Vermont. Photographer: Luke Sharrett/Bloomberg via Getty Images
Hillary Clinton, former Secretary of State and 2016 Democratic presidential candidate, speaks during a caucus night party in Des Moines, Iowa, U.S., on Monday, Feb. 1, 2016. Senator Ted Cruz of Texas won the Iowa Republican caucuses in an upset over billionaire Donald Trump, while Clinton was clinging to the narrowest edge over Senator Bernie Sanders of Vermont. Photographer: Daniel Acker/Bloomerg
Democratic presidential candidate Hillary Clinton, from left, former President Bill Clinton and daughter Chelsea acknowledge supporters during a caucus night party at Drake University in Des Moines, Iowa, Monday, Feb. 1, 2016. (AP Photo/Patrick Semansky)
DES MOINES, IA - FEBRUARY 1 : Democratic presidential candidate Bernie Sanders stands on stage with his wife Jane O'Meara Sanders during his Caucus night event at the at the Holiday Inn February 1, 2016 in Des Moines, Iowa. Sanders was in a virtual tie with Secretary of State Hillary Clinton late in caucus polling. (Photo by Joshua Lott/Getty Images)
Democratic presidential candidate Sen. Bernie Sanders, I-Vt., speaks during a caucus night party, on Monday, Feb. 1, 2016, in Des Moines, Iowa. (AP Photo/Evan Vucci)
Josh Kent celebrates at Republican presidential candidate, Sen. Ted Cruz, R-Texas, caucus night rally, Monday, Feb. 1, 2016, in Des Moines, Iowa. (AP Photo/Charlie Neibergall)
Republican presidential candidate Sen. Marco Rubio, R-Fla., acknowledges the audience at a caucus night celebration, Monday, Feb. 1, 2016 in Des Moines, Iowa. (AP Photo/Paul Sancya)
Republican Presidential candidate Donald Trump addresses his supporters after finishing second in the Iowa Caucus, in West Des Moines, Iowa, February 1, 2016. Republican Senator Ted Cruz has won the Iowa caucuses -- the first vote in the US presidential race -- in a tight contest with frontrunner Donald Trump and Senator Marco Rubio, US media projections showed. / AFP / Jim WATSON (Photo credit should read JIM WATSON/AFP/Getty Images)
DES MOINES, IA - FEBRUARY 01: Democratic presidential candidate former Secretary of State Hillary Clinton greets supporters during her caucus night event in the Olmsted Center at Drake University on February 1, 2016 in Des Moines, Iowa. Clinton is competing with Sen. Bernie Sanders (I-VT) in the Iowa Democratic caucus. (Photo by Justin Sullivan/Getty Images)
Democratic presidential candidate Sen. Bernie Sanders, I-Vt., poses for photos during a caucus night rally on Monday, Feb. 1, 2016, in Des Moines, Iowa. (AP Photo/Evan Vucci)
Jane Sanders and her husband Democratic presidential candidate Sen. Bernie Sanders, I-Vt., watch caucus returns in his hotel room, on Monday, Feb. 1, 2016, in Des Moines, Iowa. (AP Photo/Evan Vucci)
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Cruz's win and Rubio's strong showing could dent the momentum for Trump, whose candidacy has alarmed the Republican establishment and been marked by controversies ranging from his calls to ban Muslims temporarily from entering the United States to promising to build a wall on the U.S.-Mexican border.

"Tonight is a victory for courageous conservatives across Iowa and all across this great nation," Cruz, 45, said during a victory speech lasting more than 30 minutes.

An uncharacteristically humbled Trump, 69, congratulated Cruz and said he still expected to win the Republican nomination. Opinion polls show Trump leading nationally and in New Hampshire, which holds the next nominating contest.

"I'm just honored," Trump said.

Unusually large crowds poured into schools, churches and other venues for the caucuses, in which voters gather together to select a candidate.

Cruz's well established get-out-the-vote effort helped overcome the enthusiasm from large crowds that have shown up for Trump's rallies. Trump skipped the last Republican debate before the caucus because of a dispute with host FOX News. A Trump adviser said his second-place finish was expected.

Iowa has held the first contest in the country since the early 1970s, giving it extra weight in the electoral process that can translate into momentum for winning candidates.

Rubio, 44, may benefit from that momentum as much as Cruz. The Florida lawmaker established himself as the mainstream alternative to the two front-running rivals.

"Rubio has staying power. He weathered $30 million in negative ads and late deciders broke his way due to his upbeat and optimistic close," said Republican strategist Scott Reed.

Cruz was buoyed by evangelical support and thanked God for his win.

See photos of people voting in the 2016 Iowa Caucus:

35 PHOTOS
Iowa Caucus Election 2016, people voting
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Republican Cruz bests Trump in Iowa race, Clinton edges out Sanders
Caucus voters register as they arrive at a Democratic Party Caucus at Jackson Township Fire Station on February 1, 2016 in Keokuk, Iowa. Republican Senator Ted Cruz bumped billionaire Donald Trump from the top spot and Democrat Hillary Clinton faced a fierce challenge as Iowans voted in the first nominating contest of the 2016 White House race. / AFP / Michael B. Thomas (Photo credit should read MICHAEL B. THOMAS/AFP/Getty Images)
Supporters cheer as caucus returns are reported at Republican presidential candidate, Sen. Ted Cruz, R-Texas, caucus night rally, Monday, Feb. 1, 2016, in Des Moines, Iowa. (AP Photo/Chris Carlson)
Supporters cheer as caucus returns are reported at Republican presidential candidate, Sen. Ted Cruz, R-Texas, caucus night rally, Monday, Feb. 1, 2016, in Des Moines, Iowa. (AP Photo/Chris Carlson)
Democratic presidential candidate Sen. Bernie Sanders, I-Vt., watches caucus returns in his hotel room, on Monday, Feb. 1, 2016, in Des Moines, Iowa. (AP Photo/Evan Vucci)
Republican presidential candidate Donald Trump visits a caucus site, Monday, Feb. 1, 2016, in West Des Moines, Iowa. (AP Photo/Jae C. Hong)
Attendees of Republican presidential candidate, Sen. Ted Cruz's, R-Texas, caucus night rally watch as returns are displays, Monday, Feb. 1, 2016, in Des Moines, Iowa. (AP Photo/Charlie Neibergall)
Workers talk together next to a campaign map at campaign office for Democratic presidential candidate Hillary Clinton in Ankeny, Iowa, Monday, Feb. 1, 2016, the day of the Iowa caucus. (AP Photo/Andrew Harnik)
Members of the media work on laptops at Democratic presidential candidate Hillary Clintons Caucus Night Victory Party at Drake University in Des Moines, Iowa, Monday, Feb. 1, 2016. (AP Photo/Andrew Harnik)
Supporters wait for Republican presidential candidate, businessman Donald Trump, at his caucus night rally, Monday, Feb. 1, 2016, in West Des Moines, Iowa. (AP Photo/Jae C. Hong)
Supporters watches the results as they wait for Republican presidential candidate, businessman Donald Trump at his caucus night rally, Monday, Feb. 1, 2016, in West Des Moines, Iowa. (AP Photo/Jae C. Hong)
Precinct secretary Michelle Anderson counts votes for Republican candidates during a caucus in Nevada, Iowa, Monday, Feb. 1, 2016. (AP Photo/Patrick Semansky)
Precinct chair John Anderson, center, directs voters before a Republican party caucus in Nevada, Iowa, Monday, Feb. 1, 2016. (AP Photo/Patrick Semansky)
Precinct chair John Anderson counts votes for Republican candidates during a caucus in Nevada, Iowa, Monday, Feb. 1, 2016. (AP Photo/Patrick Semansky)
Luke Spence, right, precinct captain for Democratic presidential candidate, Sen. Bernie Sanders, I-Vt., speaks with undecided voter Kathy Galpin during a Democratic party caucus in Nevada, Iowa, Monday, Feb. 1, 2016. (AP Photo/Patrick Semansky)
Stephanie Spence, a supporter for Democratic presidential candidate, Sen. Bernie Sanders, I-Vt., stands with her daughters Meghan, 3 months, and Cameron, age 5, before a Democratic party caucus in Nevada, Iowa, Monday, Feb. 1, 2016. (AP Photo/Patrick Semansky)
Officials and precinct captains look over results during a Democratic party caucus in Nevada, Iowa, Monday, Feb. 1, 2016. (AP Photo/Patrick Semansky)
Precinct chair John Anderson holds pencils and slips of paper to be used by voters to select their candidates at a Republican party caucus in Nevada, Iowa, Monday, Feb. 1, 2016. (AP Photo/Patrick Semansky)
The secretary counts votes at a caucus site Monday, Feb 1, 2016, in Silver City, Iowa. (AP Photo/Dave Weaver)
Josh McNutt registers to vote in his first election at a caucus site Monday, Feb 1, 2016, in Silver City, Iowa. (AP Photo/Dave Weaver)
Supporters watch the results as they wait for Republican presidential candidate, businessman Donald Trump at his caucus night rally, Monday, Feb. 1, 2016, in West Des Moines, Iowa. (AP Photo/Jae C. Hong)
Republican presidential candidate Donald Trump, center, accompanied with wife, Melania, second from right, pauses for a selfie while visiting Saint Francis of Assisi Church, a caucus site, Monday, Feb. 1, 2016, in West Des Moines , Iowa. (AP Photo/Jae C. Hong)
Josh Kent celebrates at Republican presidential candidate, Sen. Ted Cruz, R-Texas, caucus night rally, Monday, Feb. 1, 2016, in Des Moines, Iowa. (AP Photo/Charlie Neibergall)
Mike Short (R), a Hillary Clinton caucus chairperson, speaks to undecided voters at a Democratic Party Caucus at Jackson Township Fire Station on February 1, 2016 in Keokuk, Iowa. After months of fierce campaigning, Iowans take the first steps in deciding which candidate will receive their respective party nomination for the US presidency. / AFP / Michael B. Thomas (Photo credit should read MICHAEL B. THOMAS/AFP/Getty Images)
Caucus attendees sign in as they arrive at a Democratic Party Caucus at Jackson Township Fire Station on February 1, 2016 in Keokuk, Iowa. After months of fierce campaigning, Iowans take the first steps in deciding which candidate will receive their respective party nomination for the US presidency. / AFP / Michael B. Thomas (Photo credit should read MICHAEL B. THOMAS/AFP/Getty Images)
Caucus attendees listen during a Democratic Party Caucus at Jackson Township Fire Station on February 1, 2016 in Keokuk, Iowa. After months of fierce campaigning, Iowans take the first steps in deciding which candidate will receive their respective party nomination for the US presidency. / AFP / Michael B. Thomas (Photo credit should read MICHAEL B. THOMAS/AFP/Getty Images)
Supporters of Republican presidential candidate Donald Trump watch as the first poll numbers come in to the Trump Caucus Watch Party in West Des Moines, Iowa, February 1, 2016. Iowans started voting in the opening test of the US presidential race, with Republican Donald Trump looking to capitalize on his stunning campaign success and Hillary Clinton defending her status as the Democratic favorite. / AFP / Jim WATSON (Photo credit should read JIM WATSON/AFP/Getty Images)
WEST DES MOINES, IA - FEBRUARY 1: Ballots are counted following the Republican party caucus in precinct 317 at Valley Church on February 1, 2016 in West Des Moines, Iowa. The Democratic and Republican Iowa Caucuses, the first step in nominating a presidential candidate from each party, take place today. (Photo by Brendan Hoffman/Getty Images)
WEST DES MOINES, IA - FEBRUARY 1: Ballots are counted following the Republican party caucus in precinct 317 at Valley Church on February 1, 2016 in West Des Moines, Iowa. The Democratic and Republican Iowa Caucuses, the first step in nominating a presidential candidate from each party, take place today. (Photo by Brendan Hoffman/Getty Images)
WEST DES MOINES, IA - FEBRUARY 1: Roxanne Nikkel (L) changes her voter registration to Democrat on the back of her husband, Corey Nikkel, so she can attend the Democratic party caucus in precinct 317 at Valley Church on February 1, 2016 in West Des Moines, Iowa. The Democratic and Republican Iowa Caucuses, the first step in nominating a presidential candidate from each party, take place today. (Photo by Brendan Hoffman/Getty Images)
WEST DES MOINES, IA - FEBRUARY 1: Abigail Kemp hangs signs in support of Democratic presidential candidate Bernie Sanders ahead of the party caucus in precinct 317 at Valley Church on February 1, 2016 in West Des Moines, Iowa. The Democratic and Republican Iowa Caucuses, the first step in nominating a presidential candidate from each party, take place today. (Photo by Brendan Hoffman/Getty Images)
WEST DES MOINES, IA - FEBRUARY 1: Democratic caucus-goers wait to sign in ahead of the party caucus in precinct 317 at Valley Church on February 1, 2016 in West Des Moines, Iowa. The Democratic and Republican Iowa Caucuses, the first step in nominating a presidential candidate from each party, take place today. (Photo by Brendan Hoffman/Getty Images)
WEST DES MOINES, IA - FEBRUARY 1: Kathi Phillips, the precinct leader for Hillary Clinton, hangs a sign directing Democratic caucus-goers in precinct 317 at Valley Church on February 1, 2016 in West Des Moines, Iowa. The Democratic and Republican Iowa Caucuses, the first step in nominating a presidential candidate from each party, take place today. (Photo by Brendan Hoffman/Getty Images)
WEST DES MOINES, IA - FEBRUARY 1: Helen Liu (L) and her son Chad Wang, both first-time caucus-goers, register as Republicans ahead of the party caucus in precinct 317 at Valley Church on February 1, 2016 in West Des Moines, Iowa. The Democratic and Republican Iowa Caucuses, the first step in nominating a presidential candidate from each party, take place today. (Photo by Brendan Hoffman/Getty Images)
Republican Presidential candidate Donald Trump gestures to his supporters after finishing second in the Iowa Caucus, in West Des Moines, Iowa, February 1, 2016. Republican Senator Ted Cruz has won the Iowa caucuses -- the first vote in the US presidential race -- in a tight contest with frontrunner Donald Trump and Senator Marco Rubio, US media projections showed. / AFP / Jim WATSON (Photo credit should read JIM WATSON/AFP/Getty Images)
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CLINTON SIGHS, SANDERS SMILES

The results of the Democratic race put pressure on Clinton to siphon support away from Sanders, who has won over politically left-leaning voters with his promises to take on Wall Street and start fresh with healthcare reform.

Clinton, 68, said she was breathing a "big sigh of relief" after the results. She lost Iowa to then-Senator Barack Obama in the 2008 Democratic race and never recovered.

"It is rare that we have the opportunity we do now to have a real contest of ideas," Clinton said with her husband, former President Bill Clinton, and daughter Chelsea joining her on stage.

Sanders, 74, declared himself overwhelmed. The lawmaker, who smiled broadly as he addressed supporters, is leading in New Hampshire, home to next week's second contest, but trails Clinton in other states such as South Carolina, which holds the third contest.

"Nine months ago, we came to this beautiful state, we had no political organization, we had no money, we had no name recognition, and we were taking on the most powerful political organization in the United States of America," Sanders said.

Former Maryland Governor Martin O'Malley, who had trouble gaining any traction in the Democratic race, suspended his campaign after coming in third in Iowa with 0.6 percent.

The 2016 election is shaping up to be the year of angry voters as disgruntled Americans worry about issues such as immigration, terrorism, income inequality and healthcare, fueling the campaigns of Trump, Sanders and Cruz.

Republican establishment candidates more traditional than Rubio did not fare well in Iowa. Former Florida Governor Jeb Bush took 2.8 percent, Ohio Governor John Kasich took 1.9 percent, and New Jersey Governor Chris Christie took 1.8 percent.

Surgeon Ben Carson, an outsider, placed fourth among Republicans with 9 percent while former Arkansas Governor Mike Huckabee said he was suspending his campaign for the party's nomination. Huckabee won the Iowa caucus in 2008.

Market reaction in Asia to the results was muted, with U.S. stock futures down around half a percent.

"Financial markets might be more comfortable with Hillary (Clinton) than Bernie (Sanders)," said Sean Callow, a strategist at Westpac Bank in Australia.

"There would have to be at least some jitters over the guy who plans to break up the big banks. But it's probably too early to expect the U.S. presidential race to have an impact on the U.S. stock market."

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