Stock Market Update

The S&P 500 futures are up 132 points and are trading 2.3% above fair value, the Nasdaq 100 futures are up 345 points and are trading 1.7% above fair value, and the Dow Jones Industrial Average futures are up 1,360 points and are trading 3.2% above fair value. The Russell 2000 futures are up 6.1%.

Seeing an outsized response following the news that Donald Trump has been declared the victor in the presidential election and that polling results point to the likelihood of a Republican sweep of the House and Senate, which is expected to pave the way for lower tax rates and deregulation.

Stock market participants are pricing in the prospect of stronger economic growth under a Trump administration, which is catalyzing a rally in risk assets that includes bitcoin and so-called "Trump trades," like Tesla (TSLA), Trump Media & Technology Group (DJT), as well as industry groups like banking, steel, and defense. Treasury market participants are also pricing in the prospect of stronger growth amid rumblings that they are also pricing in concerns about the budget deficit and national debt, as well as inflation heating up again.

The 2-yr note yield is up five basis points to 4.26% and the 10-yr note yield is up 15 basis points to 4.44%. The U.S. Dollar Index is up 1.9% to 105.37.

In corporate news:

• Exact Sciences (EXAS 56.00, -15.51, -21.7%): misses by $0.01, misses on revs; guides FY24 revs below consensus
• Scotts Miracle-Gro (SMG 91.20, -2.27, -2.4%): misses by $0.35, beats on revs
• Super Micro Computer (SMCI 22.94, -4.76, -17.2%): sees Q1 EPS above consensus; Q1 revs below consensus; sees Q2 EPS and revs below consensus; remains unable at this time to predict when its Form 10-K will be filed
• SPDR S&P Regional Banking ETF (KRE 64.82, +5.69, +9.6%): reflection of optimism about benefits of growth and deregulation for regional banks following GOP election wins
• Tesla (TSLA 283.28, +31.84, +12.7%): surging as Elon Musk's connection to Donald Trump seen as benefit for Tesla
• Trump Media & Technology Group (DJT 46.29, +12.35, +36.4%): soaring on Donald Trump's election win
• United States Steel Corp. (X 41.75, +2.67, +6.8%): Viewed as beneficiary of tariff protections that are expected to be imposed under a Trump administration

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the midweek session on a mixed note amid focus on the results of the U.S. election that poured in through the night, handing Donald Trump a return to the White House. Japan's Nikkei: +2.6%, Hong Kong's Hang Seng: -2.2%, China's Shanghai Composite: -0.9%, India's Sensex: +1.1%, South Korea's Kospi: -0.5%, Australia's ASX All Ordinaries: +0.8%.
  • In economic data:
    • Japan's October Services PMI 49.7 (expected 49.3; last 53.1) and November Reuters Tankan Index 5 (last 7)
    • India's October Services PMI 58.5 (expected 58.3; last 57.7)
    • Australia's October AIG Manufacturing Index -19.7 (last -33.6) and AIG Construction Index -40.9 (last -19.8)
    • New Zealand's Q3 Employment Change -0.5% qtr/qtr (expected -0.4%; last 0.4%). Q3 Labor Cost Index 0.6% qtr/qtr (expected 0.7%; last 0.9%); 3.4% yr/yr, as expected (last 3.6%). Q3 Unemployment Rate 4.8% (expected 5.0%; last 4.6%) and Q3 Participation Rate 71.2% (expected 71.5%; last 71.7%).
  • In news:
    • The U.S. dollar has rocketed higher against other major currencies, soaring to its highest level since late July against the yen.
    • The latest policy Minutes from the Bank of Japan showed expectations for a gradual increase in interest rates.
    • Australia signed a comprehensive economic partnership pact with United Arab Emirates.
    • The Tokyo Stock Exchange extended its session by 30 minutes.
• Major European indices trade on a mostly higher note while Spain's IBEX (-2.0%) underperforms notably with construction names and banks leading the weakness. STOXX Europe 600: +0.9%, Germany's DAX: +0.4%, U.K.'s FTSE 100: +0.9%, France's CAC 40: +0.7%, Italy's FTSE MIB: -0.1%, Spain's IBEX 35: -2.0%
  • In economic data:
    • Eurozone's October Services PMI 51.6 (expected 51.2; last 51.4). September PPI -0.6% m/m (expected -0.5%; last 0.6%); -3.4% yr/yr (expected -3.5%; last -2.3%)
    • Germany's October Services PMI 51.6 (expected 51.4; last 50.6) and September Factory Orders 4.2% m/m (expected 1.6%; last -5.4%)
    • U.K.'s October Construction PMI 54.3 (expected 55.3; last 57.2)
    • France's October Services PMI 49.2 (expected 48.3; last 49.6)
    • Italy's October Services PMI 52.4 (expected 50.3; last 50.5)
    • Spain's October Services PMI 54.9 (expected 56.6; last 57.0)
  • In news:
    • Final October Services PMI readings from the region were ahead of expectations.
    • Credit Agricole and Commerzbank have faced pressure after reporting their results while Unicredit's results were met with a positive reaction.