Democrats sweep Congress; premarket futures rebound more than 1%

Democrats sweep Congress; premarket futures rebound more than 1%
US Stocks Evening Brief | Wednesday, 4 November 2026 (Hong Kong time; cash-market close refers to Tuesday, 3 November, US Eastern time; regular US stock trading opens at 22:30 Hong Kong time. At publication, US stocks are in premarket trading and European markets have closed.)

On Tuesday, the Dow fell 0.40% to 51782.29 points, the S&P 500 rose 0.35% to 7568.05 points, and the Nasdaq rose 0.83% to 25365.67 points. The equal-weight S&P ETF (RSP) closed down 0.33% at $219.26; a premarket quote was not available for this edition (Reuters, republished). In premarket trading, Dow futures rose about 1.5%, S&P 500 futures about 1.1%, and Nasdaq futures about 1.1% (Dow Jones, republished). The 10-year US Treasury yield was about 4.93%, down roughly 3 basis points from Tuesday's close; Brent crude was about $102.20 per barrel, down roughly 1.4%; spot gold was about $4016 per ounce, back above $4000; and the dollar index was about 101.3 (Dow Jones, republished) (Reuters, republished).

Market themes
The premarket story in this evening's brief is a complete reversal in sentiment: futures initially plunged overnight on the prospect of a Democratic sweep and tighter AI regulation, with Nasdaq 100 futures at one point down more than 2%. Once control of both chambers of Congress was settled and markets reinterpreted the outcome as a division of power that would make sweeping legislation harder to pass, futures turned positive across the board, bonds strengthened and gold held above $4000. Reuters said the Democrats' capture of both the House and Senate was a major setback for President Trump, driven principally by voter dissatisfaction with the Iran war, the cost of living and tariff policy (Reuters). Dow Jones quoted Lombard Odier as saying this was “the best outcome for markets,” that the initial reaction was merely a knee-jerk response to a surprise result, and that the gains reflected expectations of checks and balances between the parties (Dow Jones, republished). But a reversal does not mean the risks have gone away: after ADP exceeded expectations, tonight's real test is whether services data and the Treasury's refinancing plan will reinforce the argument that divided government suppresses yields, or send premarket gains into reverse.

I. Premarket and Europe: Futures turn positive across the board after an overnight plunge; Europe closes higher, led by banks

• The size of the reversal in futures is informative in itself: Reuters reported that at 6:24 early in the morning US Eastern time, Dow e-mini futures were up 748 points, or about 1.44%; S&P 500 e-mini futures were up 1.04%; and Nasdaq 100 e-mini futures were up 0.93%, while the dollar weakened and long-dated US Treasury yields fell (Reuters, republished). A later Dow Jones update said Nasdaq futures were up 1.1%, S&P 500 futures 1.1% and Dow futures 1.5% (Dow Jones, republished). From their overnight lows to premarket gains of more than 1%, markets are pricing not the Democratic victory itself, but the prospect that almost anything will be harder to pass afterward—divided government is being treated first as a positive, rather than a risk.
• The European close confirmed the reversal: the pan-European STOXX 600 index closed up 0.6% at 649.49 points, Germany's DAX rose 0.5%, France's CAC 40 gained 0.4% and Britain's FTSE 100 rose 0.4%, against a backdrop of solid corporate earnings, stabilizing oil prices and falling yields (dpa, republished). Reuters reported during the European session that the STOXX 600 was up nearly 1% intraday, benchmark Italian and Spanish bank indexes rose 2.2% and 1.6% respectively, and the European banking sector gained nearly 4% (Reuters, republished). In Europe, banks and clean energy rose rather than the AI supply chain—suggesting that Europe's rebound was also a rotation driven by reduced political uncertainty, rather than a move following US technology stocks.
• Divergence among European stocks reinforced the point: Reuters said Novo Nordisk rose 4.2% after third-quarter adjusted operating profit beat expectations and the company raised its full-year sales and profit forecasts. Vestas rose 4%, Orsted 6.7% and Nordex 5.3%, while ASML fell 1.3% and Siemens Energy dropped 2.7% (Reuters, republished). Dow Jones said the European bank index rose 3.7%, with Deutsche Bank up 4.9%, Italy's Intesa Sanpaolo up 4.6% and Spain's Santander up 4.1% (Dow Jones, republished). Banks and clean energy are two areas that have been “held back longest by Trump policies”; their leadership suggests markets are trading the removal of that pressure first, rather than a new positive catalyst.
• Eurozone inflation gave the European Central Bank no reason to ease up: Reuters said inflation rose to 4.0% in October from 3.8% in September, a three-year high. Core inflation held at 2.5%, energy inflation reached 20.8%, and the ECB expects inflation to remain above 4% for most of the first half of 2027 (Reuters). Inflation at a three-year high alongside a higher European stock-market close suggests that European markets were also trading politics today, rather than monetary policy—expectations of a rate increase in December rose, but did not stop bank shares from rebounding.

II. Bonds, the dollar and commodities: Yields fall, the dollar weakens and gold holds above $4000

• Bonds were the clearest premarket beneficiary: Dow Jones said the 10-year US Treasury yield fell about 2.9 basis points to 4.930%, the 30-year yield was near 5.300%, and the 2-year yield rose about 1 basis point to 4.626% after falling earlier in the session (Dow Jones, republished). Long-end yields fell while the short end rose, flattening the curve. The market is betting at the long end that divided government will constrain fiscal expansion, but it is not betting at the short end that the Federal Reserve will consequently turn dovish; the two should not be conflated.
• A weaker dollar and stronger gold are two sides of the same trade: Reuters said spot gold rose 2.2% to $4016.01 per ounce and US gold futures for December rose 2.2% to $4026.90, against a backdrop of a weaker dollar and the Democratic midterm victory (Reuters, republished). Gold's return above $4000 was not due to panic—stock futures were rising at the same time—but because a weak dollar gave it a reason to rise without a flight to safety: the dollar can fall while gold and stock indexes rise.
• Oil prices fell without rekindling the geopolitical premium: Dow Jones said the Brent January contract fell 1.4% to about $102.20 per barrel, and that Trump acknowledged in an interview with The Wall Street Journal that gasoline prices pushed higher by the US-Iran conflict had contributed to the Democratic sweep to some extent (Dow Jones, republished). Oil fell, but inflation expectations did not follow, because eurozone inflation has already shown that energy costs are passing through to final prices—a decline in oil eases pressure at the margin, not the inflation level already in place.
• The Treasury's refinancing plan at 21:30 tonight is the next test for bonds: Reuters previously reported that markets broadly expect auction sizes to remain unchanged, but are watching for whether issuance of 20- and 30-year Treasuries will be reduced in 2027 while issuance of 2- to 10-year debt increases. JPMorgan expects sizes to remain unchanged until at least August 2027 (Reuters, republished). If the refinancing plan remains unchanged, it will provide further support for the argument that divided government suppresses yields; if it signals cuts to long-dated debt in 2027, long-end yields have room to fall further. Tonight, the bond market is watching the wording, not the size.

III. Stock and sector moves, including earnings: Divergence in consumer stocks—McDonald's cools in the US, Uber's guidance disappoints and CVS raises its full-year outlook

• McDonald's poured cold water on consumer stocks tonight: third-quarter revenue was $7.157 billion, up only 1% year on year and below market expectations of $7.28 billion. Adjusted earnings per share were $3.57, above the $3.38 expected; global comparable sales rose 1.5%, but US comparable sales fell 0.2% (McDonald's announcement, republished). Better-than-expected profit, a revenue miss and falling US comparable sales tell the same story together: traffic from lower-income US consumers has not yet returned, and profit was supported by franchise margins rather than selling more burgers.
• Uber likewise delivered a “good quarter, disappointing guidance”: third-quarter gross bookings were $59.8 billion, up 20% year on year; revenue was $14.766 billion, up 10%; and non-GAAP earnings per share were $0.88, up 35%. But its fourth-quarter adjusted earnings-per-share guidance of $0.95 to $0.99 was below market expectations of $1.06 (Reuters, republished). Reuters said driver shortages, rising fuel costs and the Middle East conflict weighed on ride-hailing growth from India and Brazil to Canada. The company said the Middle East conflict reduced mobility bookings growth by 75 basis points and is expected to reduce it by 100 basis points in the fourth quarter (Reuters, republished). Uber's challenge is the opposite of McDonald's: demand remains (bookings rose 20%), but costs and geopolitical pressures have weighed on margins. Tonight the market is penalizing the speed at which growth can turn into profit, not demand.
• CVS is the clearest positive among consumer and healthcare stocks tonight: third-quarter revenue was $108.4 billion, up 5.4% year on year, and adjusted earnings per share were $2.09, above expectations of $1.65. It also raised full-year GAAP earnings-per-share guidance to at least $6.98 and adjusted guidance to at least $8.20 (CVS announcement). A recovery in health insurance margins is central to CVS's guidance increase. On a day when McDonald's and Uber are both talking about cost pressure, CVS is saying that pressure is easing, which explains why it can rise on its own.
• At the other end of the premarket divergence were Musk-linked and data-center stocks: Reuters said Tesla and SpaceX were both down more than 4% in premarket trading, while Musk had invested heavily in Republican candidates in Texas. Data-center-related stocks IREN, Hut 8 and Applied Digital also fell in premarket trading (Reuters, republished). Indexes rose while Musk-linked and data-center stocks fell, showing that the premarket rebound is not lifting every stock together—money is moving out of names most closely tied to Trump policies and into areas most clearly protected by divided government.

IV. AI highlights: AMD's 2027 guidance supports chip stocks, but regulatory concerns remain

• AMD remains the strongest premarket support for the AI supply chain: Reuters said AMD rose 6.3% in premarket trading as the company forecast faster-than-expected growth in 2027, data-center sales surged and its challenge to Nvidia accelerated. Micron, Broadcom and Marvell rose 1% to 2% (Reuters, republished). Dow Jones said AMD rose more than 6% in premarket trading, lifting the broader chip sector (Dow Jones, republished). AMD shows that demand remains and will grow faster next year, offsetting concerns that construction permits could slow. Tonight the market has chosen to trust the 2027 picture presented in earnings first, then watch how much regulation slows construction.
• But regulatory concerns have not disappeared; they have shifted: Reuters said the AI trade remains in focus as Democrats made gains in key data-center states such as Texas and Georgia, where public opposition to rapid data-center expansion is growing. A portfolio manager said near-term uncertainty will persist until technology giants reach agreements with new local authorities (Reuters, republished). That means the driver of AI-stock volatility has shifted from whether demand exists to whether construction can be completed on schedule. AMD has answered the former; the latter awaits the outcome of local negotiations, something no single earnings report can answer.
• Qualcomm and Arm are next after the close: the market expects Qualcomm's fiscal 2026 fourth-quarter revenue of about $10.14 billion, down roughly 10% year on year, and adjusted earnings per share of about $2.16, down roughly 28%, under pressure from weak smartphone demand, substitution by Apple's in-house modem and rising memory costs. Arm is expected to report fiscal 2027 second-quarter revenue of about $1.38 billion and earnings per share of about $0.48 (Market preview). Qualcomm and Arm address the other end of the AI chain—end-device demand and licensing revenue, rather than data-center construction. If they also beat expectations like AMD, tonight's rebound will gain a second pillar; if they miss, chip stocks will also be the first to give back premarket gains.

V. Upcoming calendar (Hong Kong time)

• 4 November (Wednesday), 21:15: US ADP private employment increased by 86 thousand in October, above expectations of 69 thousand; the September figure was revised from 90 thousand to 86 thousand (ADP data, republished); 21:30: US September trade balance (deficit expected at about $107.7 billion) and Treasury quarterly refinancing plan; 23:00: US October ISM services PMI (expected 54.8, previous 54.9); after the close (early 5 November Hong Kong time): Qualcomm and Arm report earnings (Dow Jones, republished).
• 5 November (Thursday): Toyota, Sony and ConocoPhillips report earnings before the open; Airbnb reports earnings.
• 6 November (Friday), 21:30: US October nonfarm payrolls report (Bureau of Labor Statistics), the week's key economic release; Moderna reports earnings.
• Note: The US has switched to standard time. Regular US stock trading runs from 22:30 to 05:00 the following day in Hong Kong time. A premarket quote for the equal-weight S&P ETF was not available for this edition, so Tuesday's close is used. The Treasury refinancing plan and September trade balance were awaiting release at publication; refer to the official releases.