A blue wave sends futures into the green

Hello, this is Leonie Kidd with today’s edition of Morning Squawk.

A blue wave means green for markets. Wall Street is on track to open higher, but certain technology stocks are under pressure, with the sellers circling Elon Musk’s companies. 

The Dow, S&P 500, and Nasdaq futures have all rallied from session lows overnight, as the positive sentiment from the midterm results built momentum.

The Democrats have taken control of Congress, flipping the Senate and winning the House in a stinging rebuke to President Donald Trump and his economic record. 

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U.S. President Donald Trump struck a conciliatory tone in a series of interviews overnight, saying he “will work with the Democrats on many things,” and that he is “absolutely willing to accept” the election results. 

Alongside the swing in the futures market, the U.S. dollar fell to a one-month low, while Treasury yields dipped and gold rose as investors crowded into safe-haven trades. 

• Analysis: For an instant overnight reaction, Andrew Slimmon from Morgan Stanley IM told Squawk Box Europe that “markets like gridlock, they don’t like a party with too much power.”
• What next: High Frequency Economics’ Carl Weinberg warned the Democrats are not “veto-proof” and that the coming days will reveal their ability to push through policy that could address the affordability crisis.

Both SpaceX and Tesla are down heavily in premarket trading. The shock of the night came from Texas, where Democrats scored an extraordinary pair of victories in traditionally Republican seats. James Talarico defeated Ken Paxton, becoming the first Democrat elected to the U.S. Senate from the state in nearly four decades. Gina Hinojosa defeated three-term Gov. Greg Abbott, making her the first Democratic governor of Texas since Ann Richards left office in 1995.

• Why it matters: The flipping of these seats is being seen as the biggest blow to tech stocks, with Horizon Investments’ Scott Lander saying, “Texas is a fertile ground for that. And if he (Abbott) were to lose, I think that fertile ground is largely barren. So, that’s going to be a challenge.”
• The anti-Musk trade: Losing those seats in Texas has also exposed Elon Musk, after he spent record sums in a failed effort to keep republicans in power. 

Amazon, Alphabet and Nvidia have recovered from earlier declines, despite concerns that state-level data center restrictions could delay projects in major buildout markets. 

• The contrarian view: CNBC’s Steve Sedgwick stress-tested this theory on Squawk Box Europe, asking whether this could give the hyperscalers and neocloud companies a reason to pull back on the blistering spending pace that has…