Futures jump 2% as traders weigh Democratic sweep and chip earnings

U.S. stock futures rose by more than two percent on the evening of Tuesday, November 3, setting the stage for a potentially volatile session on Wednesday. The Dow Jones Industrial Average was projected to open substantially higher, while the Nasdaq Composite was poised for a modest increase. This movement occurred as investors digested the results of the midterm elections, in which Democrats secured control of both the House and the Senate.

CNBC’s Jim Cramer described the election outcome as a potential clearing event for the market. While Democratic control is often viewed as a headwind for the artificial intelligence trade, early data suggests a positive reception. Many observers interpreted the results as a reaction against the rapid expansion of AI infrastructure, specifically the proliferation of data centers. Cramer noted that a slowdown in this buildout could favor established technology firms, a theory supported by early morning gains in Microsoft and Amazon shares.

The semiconductor sector displayed mixed signals. Advanced Micro Devices gave up the large gains it recorded after its earnings release, while the broader chip group faced pressure. Despite the stock movement, AMD’s quarterly performance exceeded expectations set just three months prior. CEO Lisa Su reported dramatic gains in server sales relative to Intel, though she warned of double-digit declines in PC shipments for the coming year due to tough market conditions and high memory prices.

Cramer suggested that Apple could benefit from reduced PC demand, which might free up supply for other manufacturers, and from any deceleration in data center construction. Following its earnings report, Bernstein analysts raised their price target for Apple to $380 from $370, maintaining a buy rating. Arista Networks also reported strong results, with shares climbing more than five percent. The company beat expectations for revenue, operating margin, and earnings per share in the third quarter and provided fourth-quarter guidance that exceeded consensus estimates.

Qnity Electronics, a spin-off from DuPont specializing in semiconductor manufacturing chemicals, delivered a strong beat and raise. The company reported organic revenue growth of 22 percent, driven by strength in advanced nodes, thermal management, and AI printed circuit boards. Qnity also increased its full-year outlooks for both revenue and adjusted earnings per share. Novo Nordisk saw its stock rise six percent after boosting its full-year sales and operating profit guidance, driven by strong sales of its GLP-1 drugs, with the Wegovy pill exceeding estimates.

CVS Health announced it is splitting into two separate entities, a move CEO David Joyner described as coming from a position of strength. This separation allows insurer Aetna and pharmacy benefit manager Caremark to operate independently. Although CVS reported a strong third-quarter beat, its shares fell four percent, possibly due to historical Democratic scrutiny of health insurers. Bank of America upgraded Constellation Brands to hold from buy, citing reduced downside risk to beer volumes as immigration concerns ease, a call Cramer supported given the previous impact of immigration policies on the Modelo brewer.

McDonald’s reported a mixed quarter, beating estimates for earnings and same-store sales growth while missing on overall revenue. Despite the mixed results, shares rose more than 2.5 percent, continuing a recent momentum that has seen the stock gain 14 percent since October 7. The recovery suggests the stock had become undervalued after a difficult seven-month period.