First Signal

Stocks jumped the morning after Democrats won both the House and the Senate. By 10:30 am Eastern the Dow was up 1,074 points, or 2.1%, the S&P 500 1.6% and the Nasdaq 2.1%. Amazon rose 7.3%, Apple 6.7% and Microsoft 6.1%. The companies that power and build AI data centers fell instead: Vistra 14.3%, Quanta Services 12.3% and GE Vernova 10.6%, after a Democrat who wants a moratorium on data centers won the race for governor of Texas. By 10:21 am, U.S. crude was down 2.5% to $93.66 and gold up 2.6%. Private employers added 86,000 jobs in October, slightly more than expected, ADP said, CNBC reported. Our read: voters picked a slower AI build-out, and the companies that pay for it cheered.

Inside The data-center trade loses Texas · Hospitals and solar get a new Congress · A 1,000-point morning isn't what it used to be

Also moving

• Trump Media DJT −10.8%. The owner of Truth Social, 41% owned by President Trump, fell after the Democrats' win; "Democrats taking control of Congress add a check on the president's policies," CNBC reported.
• Walmart WMT +3.1%. The retailer rose with Bank of America, up 2.8%, "as investors looked for stocks outside of technology," CNBC reported; the consumer staples fund XLP hit a record.
• Dollar Tree DLTR +7.8%. The discount chain was among the names leading the staples fund higher, with Constellation Brands, up 6.6%, and Estée Lauder, up 6.1%, CNBC reported.
• IREN IREN −9.9%. The so-called neocloud company fell with its peers CoreWeave, down 7.0%, and Nebius, down 4.0%, on the "rejection of data centers in ballots across the country," CNBC reported.

No cards this morning: every big move came with a story.

CVS Health CVS −11.7%. The owner of about 9,000 drugstores, the insurer Aetna and the drug-benefit manager Caremark plans to split into two public companies by the first half of 2028, reversing its $78 billion purchase of Aetna, CNBC reported. The insurer and Caremark keep the CVS Health name; the stores become CVS Pharmacy. Quarterly sales rose to $108.40 billion from $102.87 billion, and earnings and revenue topped Wall Street's expectations, CNBC reported (CVS's filing). The stock had risen about 70% since CEO David Joyner took over in October 2024, CNBC reported, and the Financial Times first reported the plan on Tuesday. The plan was in the papers on Tuesday, so this morning's fall is a verdict on it. Our guess: investors aren't sure who wants 9,000 drugstores on their own.

Datadog DDOG −10.9%. The company that watches over other companies' apps and clouds grew revenue 35% to $1.20 billion, and forecast $1.19 billion to $1.20 billion for this quarter, its release shows: about what it just took in. Analysts expected $1.20 billion, and the stock had risen 62% this year, CNBC reported. A flat quarter is a hard sell for a stock priced on growth.

We flagged this On Oct. 30, Datadog fell 11.5%, days before its report, and our Big Moves card guessed guilt by association with the big AI spenders. This morning's forecast is the company's own word on the next quarter: $1.19 billion to $1.20 billion, against $1.20 billion in the last one.

A 1,000-point morning isn't what it used to be

The Dow rose 1,074 points by 10:30. In 1987, a move of fewer than half as many points was a crash.

The headline number this morning is the Dow's 1,074 points. The number that matters is 2.1%. On Black Monday, Oct. 19, 1987, the Dow fell 508 points, and that was 22.6% of the index. Its first 1,000-point gain came on Dec. 26, 2018, 1,086 points, or 4.98%, by Wikipedia's list of the Dow's biggest days. A 22.6% day from Tuesday's close would be about 11,700 points.

Points are how the Dow is quoted, not how it moves. A bigger index makes bigger point moves on ordinary days, so headlines will keep finding "historic" mornings that aren't. This one is a good day, not a historic one. The record gain in percent, 15.3% in March 1933, was 8.26 points.

Voters picked a slower AI build-out, and the companies paying for it cheered.

Last night we said the giants won the day on borrowed money. This morning they won it on money they may not have to spend. That changes one signal, adds a new one, and moves our odds.

What came in

Start with the split, because it is the plot. The power and data-center companies in our chart fell 7.0% to 14.3%; Amazon, Apple, Microsoft and Alphabet rose 5.2% to 7.3%. For weeks the question has been who pays for the AI build-out, and the answer kept being borrowed money: Oracle's $10 billion of bonds, then Meta's sale of as much as $25 billion. Overnight, voters in Texas made it likelier that some of that spending slows, and the giants' investors took it as a gift. That helps explain why the S&P 500, which is weighted toward the giants, beat the equal-weight S&P 500 for a second session running: 1.6% against 0.9% this morning.

That costs our favorite signal a bar. The average stock still leads the giants over the past month, but November is now even, and a slower build-out is good news for exactly the companies we bet against. The election also took a scare off the table: the VIX fell to 17.31 and oil kept sliding. What it didn't change is the Fed. Hiring is steady, pay is firm and service companies still report rising prices. Friday's jobs report is still the one that decides December.

The signals

Bars are our conviction: the chance it happens by the date shown.

Where the puck goes next: our odds through November

Noise of the day The 1,000-point Dow. It is a good morning in percent, not a historic one. The split between AI's buyers and sellers is the news.

What would make us tear this up: a weak jobs report on Friday that takes the December hike off the table while oil goes back above $104. That mix, a slowing economy with expensive energy, fits none of our three. We'll keep score at the end of November.

Tonight Qualcomm and Arm report after the bell. See you at the close.