Blue wave sends futures into green

Hello, this is Leonie Kidd from today’s Morning Squawk.

Blue waves mean green for the market. Wall Street is trending higher, but some technology stocks are under pressure as sellers circle Elon Musk’s companies.

The Dow, S&P 500, and Nasdaq futures all rebounded from session lows overnight as positive sentiment from interim results gained momentum.

Democrats took control of Congress with a scathing rebuke of President Donald Trump and his economic record, flipping the Senate and winning the House.

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US President Donald Trump struck a conciliatory tone in a series of interviews overnight, saying he would “work with Democrats on a lot of things” and “absolutely accept” the election results.

Volatility in futures markets sent the U.S. dollar to a one-month low as investors flocked to safe-haven trades, while U.S. Treasury yields fell and gold rose.

Analysis: In an immediate overnight reaction, Morgan Stanley IM’s Andrew Slimmon told Squawk Box Europe: “Markets like gridlock and don’t like political parties with too much power.” What’s next: Karl Weinberg of High Frequency Economics warned that Democrats are not “veto-proof” and that their ability to advance policies that can address the affordability crisis will become clear within days.

First is the Elon Musk trade.

both space x and tesla It has fallen significantly in pre-market trading. The shock of the night came from Texas. There, Democrats won an unusual victory in a traditionally Republican seat. James Talarico defeated Ken Paxton to become the first Democrat elected to the U.S. Senate from the state in nearly 40 years. Gina Hinojosa defeated three-term Governor Greg Abbott to become the first Democratic governor of Texas since Ann Richards retired in 1995.

Why it matters: These seat flips are seen as the biggest blow to tech stocks, said Scott Lander of Horizon Investments. “Texas is fertile ground for that. If he (Abbott) loses, I think that fertile ground becomes almost barren. So it’s going to be difficult.” Anti-Mask Deal: Losing his seat in Texas also exposed the true identity of Elon Musk, who spent record amounts of money to keep Republicans in power and failed.

Other tech stocks are rising premarket.

Amazon, Alphabet and Nvidia rebounded from earlier declines despite concerns that state-level data center regulations could delay projects in key construction markets.

A contrarian view: CNBC’s Steve Sedgwick put this theory to the test emphatically on Squawk Box Europe, asking whether this could give hyperscalers and neo-cloud companies a reason to pull back on the breakneck spending pace that has some investors worried. In a sense, it is “to free them from prison from their more outrageous expansion plans and perhaps prevent them from creating excess production capacity.”

Beyond the earnings reaction, AMD has been up significantly in pre-market trading. The company reported profits that beat Wall Street expectations in the third quarter, with revenue from its data center business nearly doubling over the same period.

Coming soon: Squawk’s first on-the-street interview with CEO Lisa Su on CNBC today at 9 a.m. ET.

Iran was one of the first foreign countries to react to the interim results.

Mohammad Bagher Ghalibaf, speaker of Tehran’s parliament, said when the results came in that Americans had said “no to war.”

President Trump blamed some of the Republican Party’s losses on the Iran war, saying, “Maybe people were unwilling to accept the short-term impact of gas prices.” He also told the Financial Times that there were no immediate plans to attack Iran.

Analysis: Experts told CNBC that a Democratic majority could increase scrutiny and increase scrutiny of the administration’s handling of Iran and Ukraine.

—CNBC’s Sarah Ming, Sean Conlon, Hugh Leask, Lim Hui Jie, Garrett Downs and Dan Mangan contributed to this report.

Jack Summers edited this version.