The US stock market rally gathered pace Wednesday after Democrats won both chambers of Congress and President Donald Trump accepted the midterm election results, easing political uncertainty. The Dow Jones Industrial Average climbed 1,022 points, or 2%, just after the opening bell before extending its gain to 1,236 points, or 2.4%.
Key takeaways
Democrats secured House and Senate majorities.
Healthcare and solar shares posted sharp gains.
Texas data-center concerns weighed on CoreWeave and SpaceX.
WTI crude fell 3% as investors considered prospects for a Middle East resolution.
Democratic sweep brings divided government
Democrats won majorities in the House of Representatives and Senate , giving them a check on Trump’s policies. They also won key gubernatorial contests, including Texas.
Trump accepted the outcome and expressed willingness to work with Democrats alongside fellow Republicans. Jay Woods, chief market strategist at Freedom Capital Markets, attributed part of the rebound to the president’s initial tone and response.
The congressional shift follows Trump’s business-friendly tax cuts, tariffs and a war in Iran that has pushed inflation higher. Investors welcomed reduced political uncertainty and the prospect of divided government.
US stock market rally lifts healthcare and solar shares
Healthcare companies, solar shares and stocks linked to a more stable economy recorded some of the strongest gains. The advance also spread across the major indexes: the S&P 500 rose 1.7% , while the Nasdaq Composite gained 2.1%.
Walmart added 1.3% and Bank of America climbed 2.6% as investors sought opportunities outside technology. Both were among the early leaders in shares tied to the economy that could benefit from a steadier environment.
Health insurers and hospital operators advanced as investors bought companies that could benefit from Democratic policies or an easing of tougher Trump actions. Molina Healthcare and Centene each rose 6% , while HCA Healthcare gained 7% .
The Invesco Solar ETF jumped 9% , adding to the sector gains accompanying the broader US stock market rally.
Texas result weighs on data-center-linked stocks
CoreWeave and SpaceX shares fell as the Democratic victory in Texas intensified concerns about restrictions on data centers. Gina Hinojosa, who won the governor’s race, had pledged an immediate moratorium on data centers in the state, a key hub for the industry.
Before the election, investors had worried that a Democratic sweep would bring tighter restrictions nationwide, weighing on stocks tied to the artificial intelligence build-out . Hinojosa’s victory added to those concerns Wednesday.
SpaceX, which is headquartered in Texas, declined alongside CoreWeave even as the broader market advanced.
Strategists point to gridlock as oil falls
Strategists at Freedom Capital Markets and Morgan Stanley Investment Management linked the positive market response to the prospect of political gridlock. Their interpretation was that divided government limits policy changes that can disrupt the business outlook.
Woods said gridlock has historically benefited the market. Andrew Slimmon of Morgan Stanley Investment Management said markets “like gridlock — they don’t like a party with too much power.”
Slimmon also said that a stronger push toward resolving the Middle East conflict following the election could lower oil prices. He linked elevated oil prices to inflation, the Federal Reserve’s challenges and higher interest rates.
WTI crude oil prices fell 3% on Wednesday.
Article produced with the assistance of artificial intelligence and reviewed by the editorial team.
