Morning review: The Democrats are on track for a majority in the lower house of Congress, and Nasdaq 100 contracts plunged 2.09%. π¨
Friends, America voted tonight, and the market has already reacted. π
But before the headlines, let's start from the beginning, what happened yesterday?
Tuesday on Wall Street, Election Day
Nasdaq rose 0.83%. π’
S&P 500 rose 0.36%. π’
Russell 2000 rose 0.23%. π’
The Dow Jones fell 0.38%. π’
What lifted the indices was chips, the chip ETF $SMH rose 2.01%, after the chip index closed on Monday about 22% below its October 6 peak. π
On the other side, Apple $AAPL continued to fall after its earnings, with a decline of 1.90%, weighing on the Dow. π΄
In macro data, job openings (JOLTS) for September rose to 7.5 million, above estimates of 7.1 million, and the 10-year Treasury yield rose to 4.95%, from 4.89% on Monday.
Shopify $SHOP plunged 8.74% after its earnings: revenue of $3.74 billion, slightly below estimates of $3.75 billion, and gross merchandise volume on the platform reached $119.15 billion, compared to estimates of $120.08 billion.
Beneath the surface
Look at what happened yesterday, the exact opposite of Monday, SPY rose 0.30%, but RSP, the equal-weight version of the S&P 500, fell 0.33%.
This time the giants lifted the index, and most stocks did not join, a sign of change?? π
The same in the Nasdaq 100: QQQ rose 0.62%, and the equal-weight version QQQE rose only 0.05%.
Only 4 out of 11 S&P 500 sectors rose. Leading: Technology (XLK) with 1.31% and Communication Services (XLC) with 1.18%. π
At the bottom: Consumer Staples (XLP) with a decline of 2.07% and Materials (XLB) with 2.01%.
And the unusual move of the day: π€« the solar ETF $TAN surged 3.02% on hopes that a Democratic Congress would block the Trump administration's policies against the industry, the sector is rising strongly in overnight trading, and later this morning we will also update on insider trades in two companies π
And after the close came the earnings report everyone was waiting for: β¬οΈ AMD $AMD reported record revenue of $13.4 billion, growth of 45%, and adjusted earnings per share of $2.09, compared to estimates of $1.95. π₯
The guidance was also very strong! π’ about $17 billion in the current quarter, compared to estimates of $16.2 billion. The stock rose 3.65% in regular trading, and in overnight trading it adds about another 8%. β‘οΈ
Super Micro $SMCI also forecasts sales of $72-82 billion in fiscal year 2027, above estimates of $69.17 billion, and the stock rises 6.67% in overnight trading. π₯
And Arista $ANET forecasts revenue of $3.9-4.0 billion in the fourth quarter, compared to estimates of $3.6 billion, and it rises 8.37% in overnight trading. π₯
What is happening now, nothing short of drama!! π¨
Overnight, the markets fell sharply, π½
The Nasdaq 100 fell 2.09%, π΄ the S&P 500 fell 1.24% π΄ the Dow fell 0.82%. π΄
The reason?
The elections, according to NBC estimates, the Democrats will win about 244 seats in the lower house of Congress, compared to the 218 required for a majority. β οΈ
In the Senate there is no decision yet, but the Democrats have already taken the seats in North Carolina and South Carolina from the Republicans. β οΈ
What is the market afraid of?
A Democratic victory could bring more restrictions on data centers, hurting AI stocks. π©
And in Texas, which holds about 27% of US data center capacity according to Wells Fargo, Democratic candidate Gina Hinojosa, who called for a freeze on their construction, apparently took the governor's seat from current Governor Greg Abbott.
In overnight trading, Tesla $TSLA already fell by 5.73%.
And then came the change π₯
At around seven o'clock, the indices started to correct strongly π’
The correction started while Trump was interviewed on Fox, spoke in a conciliatory tone, promised full cooperation, and said he would accept the election results and that a peace agreement with Iran is even possible "if they behave". π€
Shortly after his statement, the speaker of the Iranian parliament responded to his words, "The people voted against war, and we agree" π€
Investors like it, and the indices narrowed their losses, the Nasdaq went from declines of more than 2% to declines of about 0.5% πΌ
The chip sector went from declines of about 3% to positive territory, the Russell rises about 0.3% π
The green energy sub-sector, solar energy companies are rising strongly,
Pay attention to the attached watchlist with double-digit gains in some of the stocks!! βοΈ
We are closely monitoring mainly $ENPH and $ARRY, which saw significant insider trades in the last 24 hours. π€«
We will update if there are further developments βΆοΈ
What is important today π
At 15:15 Israel time, the ADP employment report for October is released, and at 17:00, the Services ISM Purchasing Managers' Index.
Before the open, Uber $UBER, CVS $CVS, and Datadog $DDOG report.
After the close, Qualcomm $QCOM, Arm $ARM, and AppLovin $APP report.
Have an excellent day! π