Democrats, according to the vote count, are taking both chambers of the US Congress. This is the outcome of the midterm elections. Futures on US indices fell overnight, and by the morning of November 4 they reversed upward.
Midterm elections take place in the middle of a presidential term: voters re-form Congress. Which laws pass over the next two years depends on its composition.
For a trader, it was a night of full repricing. The indices went from minus 2% to plus 2% in a few hours, while individual stocks diverged in opposite directions.
How did the markets move?
Overnight, the Nasdaq lost more than 2%. By the opening of the US session, its futures were up 2.2%, and S&P 500 futures were up 1.8%.
- Microsoft, Apple and Amazon - opened up 5-7%
- Nvidia - stayed flat near zero
- BTC - dropped below $76,000 and returned to $78,300
- WTI - down 2.8%, to $93.45 per barrel
Why did data centers fall?
Data center operators' stocks looked the worst. These are facilities with servers that run AI models.
Some of the victorious Democrats campaigned on promises to tighten regulation of the industry, including in Texas and Ohio.
- Cipher Mining -14%. The steepest decline in the group.
- Hut 8 -10%, Bitdeer -6%. Following the decline leader.
- CoreWeave -5.9%, IREN -5.5%. Rounding out the sector's list of losses.
- SpaceX -7.6%, to $137.23, Tesla -5.3%, to $386.26. Elon Musk faces several investigations at once.
Musk himself wrote on X overnight: "Data centers in space are looking pretty attractive right now."
Who rose against the sector?
Riot Platforms moved against the sector: +14%, to $15.91.
Key point: the company leased its entire campus in Corsicana (Texas) to an AI lab for 15 years for $28 billion and expects more than $2 billion in annual operating profit at full capacity.
What about macro?
The day's statistics came out mixed.
- ISM services for October - 54.5 versus a forecast of 54.8 and 54.9 a month earlier
- New orders - 55.9 after 59.8
- ADP - 86,000 jobs instead of the expected 69,000
- US 10-year Treasury yield - 4.928%
The official jobs report comes out on Friday, with a consensus of 65,000. You can keep the date in the economic calendar.
Have you calculated how much the right entry would have made?
Sessions like this are easy to analyze after the fact: data center operators down, big tech stocks up. The question comes down to size. A 2% index move is only noticeable on an account of the corresponding size, and a single futures contract won't hold a small deposit in terms of risk. In prop trading, the company allocates the capital for the trade: its risk-based selection, its account, an agreed share of the result for the trader. The structure of this scheme is worth examining before the next such reversal.