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US stocks surge after Democrats win midterm elections

Summarised from 7 outlets · 11 reports · Updated 4 Nov, 17:58 · Archive

US stock markets rose sharply on Wednesday after Democrats won control of Congress in midterm elections.

US stock markets rose sharply on Wednesday following the Democrats' decisive victories in the midterm elections, which saw the party take control of both chambers of Congress for the remainder of President Trump's presidency. The Dow Jones Industrial Average surged more than 1,200 points, or about 2.4 per cent, whilst the S&P 500 and Nasdaq Composite rose 1.7 per cent and 2.1 per cent respectively. The gains extended beyond US markets, with the FTSE 100 in London closing up 1.8 per cent and European indexes also posting significant advances.

In Senate races, Democrats achieved historic victories in Republican strongholds, including Texas, South Carolina and Kansas. According to Barclays Capital analysis, Democrats may ultimately win 258 House seats, a gain of 43, which would represent the largest House majority for any party since at least 2009. In the Senate, Democrats are on track to gain seven to potentially nine seats, producing the largest Senate majority for either party since 2015.

Wall Street analysts attributed the market rally to several factors. Investors welcomed the removal of pre-election uncertainty and the prospect of political gridlock in Congress. Stephen Brown of Capital Economics noted that whilst Democrats made substantial gains, they still lack a filibuster-proof Senate majority and face potential presidential vetoes, limiting immediate policy changes. Rachel Winter of Kilik & Co added that the market also benefited from President Trump accepting the election results without contesting them.

Political gridlock has historically favoured markets by reducing the likelihood of volatile, sweeping tax and spending legislation. Michael Krautzberger of Allianz Global Investors said investors could conclude that Washington remains 'structurally constrained', limiting prospects for dramatic economic shifts. Experts noted that stocks typically rise following midterm elections regardless of outcome, owing to the certainty that follows electoral resolution.

However, the results produced mixed effects across different sectors. Tech stocks faced pressure amid expectations that Democrats would pursue stricter regulation of artificial intelligence and data centre expansion. Several Democratic-elected senators had campaigned on greater restrictions to data centre construction. Oracle and Nvidia opened lower, though Alphabet rose 3.5 per cent. Retailers reliant on imports, including Walmart and Target, gained 1.3 per cent and 3.3 per cent respectively, reflecting expectations of possible tariff policy changes.

Oil prices declined following the election, with Brent crude down 0.7 per cent to $102.87 per barrel and West Texas Intermediate down 0.2 per cent to $94.97 per barrel, as investors grew optimistic that Trump might moderate foreign policy decisions. The broad market rally also extended to major technology companies, with the Nasdaq-100 stocks including Amazon rising 7 per cent, Apple and Microsoft each gaining 6 per cent.

US stocks surge after Democrats win midterm elections
Image: Evening Standard

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In this story: Democrats · Republicans · Donald Trump · Congress · Wall Street · Texas · Senate

This summary was written by AI from the headlines and standfirsts above, and states as fact only what at least two outlets report. How we use AI · Report a problem · Corrections log