US stock index futures diverged on US midterm election day. Dow Jones is down 0.5%, S&P 500 - 0.15%, Nasdaq 100 is flat. Voting for Congress is underway today, and the market will see the first counting results overnight.
Midterm elections are re-elections of Congress between presidential campaigns. Their outcome determines whether the administration can pass its laws.
For a trader, this is a night without a clear result. The market holds its positions and waits for the first counting numbers, and the reaction will come at the open.
Where are the indices?
As of 11:39 MSK on November 3, futures are trading as follows:
- Dow Jones - around 51,880 points
- S&P 500 - around 7,560 points
- Nasdaq 100 - around 28,140 points
Dow Jones is an index of the 30 largest US companies. It is calculated based on share prices with a divisor of 0.152.
Monday closed mixed: Dow Jones +0.41%, S&P 500 -0.51%, Nasdaq Composite -1.07%. Chipmakers dragged it down.
Why has pressure on Republicans increased?
The reason is expensive energy amid the conflict with Iran. This hit the positions of Donald Trump and Republicans.
- Societe Generale forecast. The bank's US team expects a full sweep by Democrats.
- Technology sector. Such an outcome will not add to its upside, the bank warns.
- Long-term government bonds. A new flattening of the yield curve is possible.
What about individual stocks?
Apple was down about 3% in premarket trading after its fourth-quarter revenue forecast came in weaker than expected. Palantir was down almost 3%, even though its third-quarter report came in above forecasts.
Today's earnings include AMD, SMCI, Pfizer, Shopify and Booking Holdings. Report and macro data dates are in the economic calendar.
What will happen to volatility?
- Scenario A. The counting outcome is clear quickly. Futures price it in at the open, then attention shifts to corporate earnings.
- Scenario B. The result is disputed, and the count drags on. Then expect price gaps at the open, wide spreads and sharp moves in the technology sector and long-term government bonds.
Key point: the opening price after election night may be far from the closing price. It is worth re-reading the daily loss limit rules in advance - program conditions are collected in the prop firm catalog.
Are you holding an index overnight during the vote count?
Election results night either gives you the best week of the quarter or a disabled account. At the open, an index future can blow past your stop. After that, everything depends on the program's rules. At some prop firms, such a gap will be counted as exceeding the daily loss limit; at others, holding a position overnight is covered by a separate permission. It is easier to check these points before the vote than to explain them later in a payout request.