Markets: Dow surges 1,112 points after Democrats take both chambers

U.S. stock markets rallied sharply on Wednesday following the midterm elections, in which President Donald Trump's Republican Party lost its sole control of the federal government. The S&P 500 index climbed 1.8 percent, moving toward its best performance in three months. The Dow Jones Industrial Average gained 1,112 points, a 2.1 percent increase, as of 10 a.m. Eastern time. The Nasdaq composite rose 2.4 percent in the same trading session.

Solar power stocks led the broader market gains as traders assessed the political shift. First Solar shares jumped 11.1 percent, and Enphase Energy climbed 11.6 percent. Investors appear to favor a Democratic-controlled Congress, which could support renewable energy initiatives. This political balance is often preferred by Wall Street because it reduces the risk of sweeping economic changes from the White House.

Several high-profile companies tied to the administration faced losses. Trump Media & Technology Group dropped 9.5 percent, extending its year-to-date decline to 55.1 percent. The stock has fallen toward $5 from a peak of $175 five years ago. Tesla declined 3.6 percent, and SpaceX fell 3 percent. Elon Musk, a major donor to Republicans and a former top adviser to Trump, faces potential scrutiny from a Democratic-controlled Congress.

The artificial intelligence sector showed mixed results. Nvidia, a key player in AI chips, slipped 0.5 percent after an earlier drop of 2.8 percent. CoreWeave, which rents AI computing power, fell 6.8 percent. Advanced Micro Devices rose 3.4 percent after reporting quarterly profits that exceeded analyst estimates. Investors expressed concern that Democratic control of Texas could slow the construction of new AI data centers.

Bond yields declined as the session progressed. The yield on the 10-year Treasury note fell to 4.92 percent from 4.95 percent late Tuesday. This move suggests investors expect a Democratic Congress to check government spending and tax cuts, potentially limiting the growth of the national debt. Yields had reached decades-high levels in the summer due to concerns over inflation and fiscal policy.

Global markets also reacted to the U.S. political outcome. Stock indexes in Paris and Shanghai both rose 2.2 percent, while London climbed 1.8 percent. Japan’s Nikkei 225 index diverged from this trend, falling 1.4 percent. Oil prices eased, with Brent crude dropping 2.9 percent to $100.63 per barrel. This decline follows a period of volatility driven by the ongoing war with Iran, where Brent prices have fluctuated between $70 and $120 per barrel.

Market strategists noted that corporate earnings often outweigh election results for long-term performance. Brian Jacobsen, chief economic strategist at Annex Wealth Management, stated that "Earnings trump elections." Carsten Brzeski, global chief of macro at ING Bank, described the new political dynamic as potentially making Trump an "angry duck" who might restart tariff tensions, or a "tame duck" who focuses on ending wars to secure a Nobel Peace Prize.