On Wednesday, news of a Democratic election victory boosted risk appetite and sent all three major US stock indexes higher, with tech giants leading gains while AI infrastructure-related shares were sold off. Oil prices plunged as the market interpreted a Democratic sweep of Congress as a political signal pointing toward de-escalation of the Iran conflict. US Treasury yields fell as the oil slump lowered inflation expectations and political gridlock was seen as likely to constrain the room for expanding the fiscal deficit. Gold rose more than 3%. Cryptocurrencies first fell and then rebounded.
US Stocks
At the close, the Dow Jones Industrial Average rose 1,569.40 points, or 3.03%, to 53,356.12; the S&P 500 gained 119.70 points, or 1.58%, to 7,688.62; and the Nasdaq Composite added 364.50 points, or 1.44%, to 25,736.51. The Magnificent Seven index rose more than 3%, its best single-day performance since August. Apple (AAPL.US), Microsoft (MSFT.US) and Amazon (AMZN.US) each climbed more than 5%, leading the tech giants higher. However, AI infrastructure-related stocks were hit by selling, with chip, optical communications and data center-related names broadly declining. The Philadelphia Semiconductor Index fell 3% to a six-month low, with Micron Technology (MU.US) down 7.00% and Nvidia (NVDA.US) down 3.17%. Credo Technology (CRDO.US) dropped more than 9%, Lumentum (LITE.US) fell nearly 8%, and Marvell Technology (MRVL.US) slid more than 7%. CoreWeave (CRWV.US) fell 9.90% to $48.42, a record low since its listing; Oracle (ORCL.US) declined 1.92%; and IREN (IREN.US) dropped 11%. The market logic is that Democrats made breakthroughs in the midterm elections in major data center states such as Texas and Georgia, while local grassroots opposition to rapid data center expansion continues to build. If infrastructure expansion is blocked and computing supply tightens, computing prices could rise while capex pressure eases, which would instead help hyperscale cloud providers with existing infrastructure improve their earnings quality. Tesla (TSLA.US) fell more than 3%, and SpaceX (SPCX.US) dropped nearly 4% on concerns about how a Democratic-controlled Texas government might treat Musk's companies. Sectors most sensitive to policy led the gains. Among financials, JPMorgan Chase (JPM.US) rose 4.20%, Goldman Sachs (GS.US) gained 3.59%, and Morgan Stanley (MS.US) added 4.25%. Healthcare and consumer discretionary also advanced. Defense stocks bucked the trend and fell on worries that Democrats would tighten Pentagon budgets. The Nasdaq Golden Dragon China Index closed up 3.49% at 5,722.71, briefly breaking above its 50-day moving average intraday and approaching its 100-day moving average.
European Stocks
Germany's DAX 30 rose 573.05 points, or 2.22%, to 26,437.67; the UK's FTSE 100 gained 190.78 points, or 1.79%, to 10,829.21; France's CAC 40 added 157.58 points, or 1.96%, to 8,177.89; the Euro Stoxx 50 climbed 142.49 points, or 2.32%, to 6,287.05; Spain's IBEX 35 advanced 563.70 points, or 3.00%, to 19,370.90; and Italy's FTSE MIB rose 1,089.19 points, or 2.18%, to 51,031.02.
Asia-Pacific Stocks
Japan's Nikkei 225 fell 1.42%, South Korea's KOSPI rose 0.62%, India's BSE SENSEX gained 2.56%, and Indonesia's composite index added 0.32%.
Forex
The US Dollar Index (DXY), which measures the greenback against a basket of six major currencies, fell 0.35% to 101.51.
Cryptocurrencies
Cryptocurrencies rebounded. Over the past 24 hours, Bitcoin rose nearly 4% to $80,800, while Ethereum gained more than 6% to $2,440. Cryptocurrencies came under pressure in the early overnight election phase on expectations of tighter crypto regulation, then turned sharply higher as rotation into the tech sector accelerated.
Precious Metals
In late New York trading on Wednesday (November 4), spot gold rose 3.32% to $4,060.18 an ounce, while spot silver gained 4.87% to $52.2265 an ounce.
Crude Oil
December WTI crude futures settled down $7.97, or more than 8.29%, at $88.12 a barrel, a cumulative pullback of more than 15.36% from the October 30 close. January Brent crude futures settled down $8.98, or nearly 8.87%, at $94.62 a barrel. The market interpreted a Democratic sweep as a political signal pointing toward de-escalation of the Iran conflict. US Vice President Vance explicitly attributed the Republican defeat on social media to the Middle East conflict, further reinforcing the de-escalation narrative.
Metals
LME copper fell $25 to $14,011 a ton. LME aluminum rose $2 to $3,047 a ton. LME zinc gained $16 to $3,807 a ton. LME lead fell $2 to $1,882 a ton. LME nickel rose $432 to $15,779 a ton. LME tin fell $440 to $46,995 a ton. LME cobalt was flat.
Macro News
Democrats retook Congress in the midterm elections, and the "blue wave" lifted risk appetite. According to reports, Democrats prevailed over Republicans in the US midterm elections and are expected to reclaim control of both the Senate and the House, with multiple media outlets describing the outcome as a "blue wave" or even a "blue tsunami." The market read the political shift as a double positive of cooling geopolitical risk and policy constraints. US President Trump said he has no immediate plans to strike Iran after the midterms. Analysts said the rewritten congressional power balance could weaken the Trump administration's room to act, and that reduced post-election uncertainty would help sidelined capital flow back into risk assets, even though expectations of higher taxes and tighter regulation also weighed on some sectors. In addition, historical data shows markets generally prefer a "divided government." In 10 midterm elections and 5 presidential elections that produced divided government, the S&P 500 rose an average of 15% one year later, with positive one-year returns in 14 of 15 cases.
Falling oil prices pushed down inflation expectations, and Treasuries drew strong buying. The sharp crude drop fed directly into inflation expectations, with the 10-year US breakeven inflation rate falling to its lowest level since August, providing fundamental support for Treasuries; the 10-year Treasury yield fell 7 basis points to 4.89%, holding below the 5% mark for a second straight time and marking its lowest close in two months. Analysts said the bond market also benefited from another political logic: a Democratic-controlled Congress would constrain the Trump administration's room to expand the fiscal deficit, compressing the supply premium embedded in long-end bonds. The US Treasury's quarterly refunding statement provided additional support — the Treasury announced it would keep note and bond auction sizes unchanged "for the next several quarters" and removed the word "at least" from previous wording, which the market read as an implicit possibility of future supply increases, though the near-term signal was neutral.
Wall Street warned that under a divided government, the 2027 debt ceiling fight will test the "safe-haven myth" of Treasuries. Although Treasury yields fell across the board on news of the Democratic victory, Wall Street's concerns focused on another issue — the debt ceiling. The US federal government is now only about $800 billion away from its $41.1 trillion statutory borrowing limit. Strategists expect the government to hit the ceiling in the first half of 2027. At that point, the Treasury could use extraordinary accounting measures to free up some borrowing room to avoid default, but Congress must ultimately raise or suspend the debt ceiling to fully eliminate the risk of a technical default. With Democrats in full control of Congress, a standoff with the Trump administration over government borrowing could be prolonged. Fitch Ratings warned last month that a Democratic-controlled Congress could increase the risk of political brinkmanship over the debt ceiling. The agency also said the outgoing Republican-led Congress could raise or suspend the debt ceiling before its term ends at year-end, otherwise the issue will become a major test for the new Congress.
Investors are hoping for a year-end rally, but Barclays cautioned that the midterm elections will not clear the stock market's gloom, with AI revenue and financing as the two biggest overhangs. After a difficult October pullback, Wall Street increasingly sees Election Day as a potential rebound catalyst. But Alex Altmann, global head of equity tactical strategy at Barclays, argued the election is unlikely to change the fundamental issues driving recent market volatility. The biggest forces weighing on stocks — doubts about artificial intelligence (AI) returns and the cost of financing its buildout — will not be resolved by this election. He also noted that although investors had already reduced equity exposure, leaving room to add back positions, there are few trading days left this year, and the Thanksgiving and Christmas holidays typically bring thinner liquidity.
Company News
Arm Holdings (ARM.US) reported better-than-expected Q2 results, with licensing revenue surging 50% and data center royalties doubling. The results showed Arm's Q2 revenue was $1.443 billion, up 27% year over year, beating analyst expectations and marking its best second quarter ever. This was Arm's fifth consecutive quarter of year-over-year revenue growth above 20%. Driven by a broad surge in AI computing demand, Arm's licensing and other revenue reached $773 million in the quarter, up 50% year over year; royalty revenue was $670 million, up 8% year over year, with data center royalty revenue doubling year over year. On profitability, adjusted net income was $566 million versus analyst expectations of $514.2 million; adjusted operating profit was $638 million versus expectations of $575.7 million; adjusted earnings per share were $0.52 versus expectations of $0.47. For guidance, the company expects third-quarter revenue of $1.49 billion to $1.59 billion, versus analyst expectations of $1.53 billion.
Qualcomm (QCOM.US) issued a Q1 profit guidance below expectations, dragged down by its handset business and squeezed by memory costs. Qualcomm's fiscal 2026 fourth-quarter results showed revenue of $10.322 billion, down 8% year over year but above the market's $10.1 billion estimate; non-GAAP diluted earnings per share were $2.17, down 28% year over year but slightly above the expected $2.16. Qualcomm noted that component and manufacturing costs were "rising broadly." Like many chipmakers, the company is facing higher spending due to its own supply chain shortages and insufficient memory chip supply — itself triggered by surging demand for data center equipment. The handset market remains a drag on Qualcomm's performance. Revenue in that segment plunged 26% last quarter to $5.14 billion, below analysts' $5.25 billion estimate. In addition, its technology licensing business QTL posted revenue of $1.304 billion, down 7%. The company expects fiscal 2027 first-quarter revenue of $10.4 billion to $11.2 billion, versus analyst expectations of $10.55 billion; it expects first-quarter adjusted EPS of $2.15 to $2.35, versus expectations of $2.32. As of press time, Qualcomm fell more than 7% after the bell on Wednesday.
Coherent (COHR.US) posted record Q1 revenue up 50%, with data center revenue surging 79%, targeting $3 billion in quarterly revenue. The results showed Coherent's first-quarter revenue was $2.37 billion, up 49.9% year over year (up 56% on a pro forma basis excluding divestitures) and up 15.9% sequentially, a record for a single quarter; according to market consensus, the figure beat analysts' average estimate by about 3%. Profitability was even stronger: GAAP gross margin was 39.1%, up 254 basis points year over year; non-GAAP gross margin was 40.6%, up 184 basis points year over year. GAAP net income attributable to the company was $385 million, up 70.2% year over year and up 59.9% sequentially; GAAP diluted earnings per share were $1.90, up $0.71 year over year; non-GAAP diluted earnings per share were $2.09, up about 80% year over year and about 20% above market expectations. By business, data center and communications was the absolute growth engine: revenue surged 79% year over year and accounted for about 82% of total revenue; industrial revenue was roughly flat year over year and sequentially. The only obvious weak spot in the quarter was cash flow: net cash from operating activities was -$92.7 million, mainly due to seasonal working capital use and sharply expanded capital spending — capex reached $775.5 million in the quarter for capacity expansion.
AppLovin (APP.US) delivered what could be called a textbook quarter: Q3 revenue jumped 55%, net margin of 66% topped the advertising industry, and buybacks reached $1.4 billion in a single quarter. The "AI plus advertising" platform AppLovin posted third-quarter revenue of $2.185 billion, up 55% year over year; net income of $1.439 billion, up 72% year over year, with a net margin of 66% (versus 59% a year earlier); adjusted EBITDA of $1.842 billion, up 59% year over year, with an adjusted EBITDA margin of 84% (versus 82% a year earlier). Diluted earnings per share were $4.30, versus $2.45 a year earlier. Cash flow was equally strong: third-quarter operating cash flow was about $1.429 billion, and free cash flow was about $1.418 billion, up about 35% year over year. AppLovin continued its aggressive shareholder return strategy: in the third quarter it repurchased and withheld 4.1 million Class A common shares for about $1.4 billion — almost equal to its entire free cash flow for the quarter; buybacks over the first nine months totaled $2.811 billion. The board also approved an additional $3.2 billion buyback authorization, bringing total repurchase authorization to $3.6 billion as of the end of October, more than one-tenth of the company's current market value. The company's fourth-quarter guidance continued its dual theme of high growth and high margins: revenue is expected at $2.365 billion to $2.395 billion (midpoint about $2.38 billion, up about 9% sequentially); adjusted EBITDA is expected at $1.995 billion to $2.025 billion, implying a margin of 84% to 85% — meaning the top end of the guidance range would imply further margin expansion from the third quarter.
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