US equity futures diverged Thursday as a rotation out of semiconductor stocks extended into a second day. Investors looked past the initial relief rally following the US midterm elections to assess the implications of a Democratic-controlled government.

Contracts on the S&P 500 Index were flat at 7:47 a.m. in New York, while Nasdaq 100 futures fell 0.8% An exchange-traded fund tracking US-listed semiconductor stocks dropped more than 3% in premarket trading, extending losses from Wednesday.

Chipmakers and memory stocks remained under pressure amid concerns that a Democratic sweep of Congress could bring tighter regulation of US data centers and weigh on semiconductor demand. Disappointing reactions to earnings from Arm Holdings Plc and Qualcomm Inc. added to the selling pressure.

Still, traders cautioned against interpreting the broader market moves as a fundamental shift in investor preferences. To JPMorgan’s equity derivatives team, the rotation looks more like positioning-driven versus a true fundamental rotation.

“I am not seeing customers flipping long or chasing the laggards higher,” Christina Jones at JPMorgan wrote in a note. “To me, the only pocket of the market where there is some true rotation going on is within Technology, Media and Telecommunications.”Jones added that there’s a clear propensity to own quality large caps, specifically those with clear access to financing and owners of compute, for instance, some of the hyperscalers.

The broader market may also find support from favorable seasonal trends following the midterm elections. The S&P 500 Inc. has averaged a 15.5% price gain in the 12 months following outcomes since 1954, rising in every one of the 18 instances, according to Goldman Sachs Group Inc.

“Since 1952, the 12 months after a midterm election have been the strongest stretch over the four-year cycle for the S&P 500,” Goldman strategist Ioannis Blekos wrote in a note.

In fact, trading desks across Wall Street are encouraging investors to boost their exposure to US stocks on bets of a year-end rally post midterm elections.

Earnings results have also been upbeat as the season approaches its final stretch, with about three-quarters of the S&P 500‘s market value having reported results. So far, 84% of companies have beaten earnings estimates, while 12% have missed.

In single stocks, AppLovin Corp. shares soared after the mobile-app marketing company’s third-quarter results beat expectations and it gave an outlook that is above the analyst consensus estimate. Tapestry Inc. shares rose ahead of the bell after the accessories company’s first-quarter results topped Wall Street expectations, and management boosted its annual guidance, as well as its capital returns projection. Cava Group Inc. sank on concern the Mediterranean chain’s momentum is slowing despite the popularity of new dishes such as salmon bowls and barbecue pita chips.