Post-election hedging and liquidation fueled a rebound in US stocks, but the market faces policy and regulatory challenges.

Following the US midterm elections, Nasdaq 100 futures rebounded approximately 929 points from their intraday lows, S&P 500 futures rose about 1%, and Dow Jones futures gained about 700 points. Goldman Sachs and Deutsche Bank analysts attributed the rebound to the unwinding of pre-election hedging positions and a contraction in risk premiums. Texas Governor-elect Gina Hinojosa stated that the freeze on data center construction permits will not be lifted until a regulatory framework is in place, which could delay the deployment of computing capacity. Deutsche Bank considers the potential triggering of the US debt ceiling issue in the second quarter of next year a significant policy risk.