The S&P 500 jumped 1.2% in early trading and was potentially on track for its best day in six weeks. The Dow Jones Industrial Average was up 1,178 points, or 2.3%.
Most of the U.S. stock market rallied on Wednesday as Wall Street attempted to distinguish winners from losers following significant losses for President Donald Trump’s party in the midterm elections.
Early beneficiaries appear to include solar-power firms. Conversely, investors are identifying potential risks for Trump’s social-media company, the artificial-intelligence sector, and businesses associated with Elon Musk, who provided substantial <a s impact caused U.S. stock futures to oscillate between gains and losses before the market opened.
For the time being, the S&P 500 climbed 1.2% in early trading, putting it on pace for its strongest performance in six weeks. The Dow Jones Industrial Average rose 1,178 points, or 2.3%, by 9:35 a.m. Eastern time, while the Nasdaq composite gained 1.1%.
Wall Street strategists had previously advised investors not to overreact to the election, noting that its long-term impact might be minimal. Historically, U.S. equities have performed well in the six months following midterm elections, regardless of the outcome. Stock valuations are driven primarily by corporate earnings and Democrats positioned to take control of both the Senate and the House of Representatives. This could serve as a check on the White House, which remains under Trump’s leadership. Investors generally favor split control in Washington as it reduces the likelihood of drastic economic policy changes.
Much remains unpredictable, of course, and Trump retains executive authority over critical areas such as defense, foreign policy, and, in some instances, trade.
A pessimistic outlook suggests that “Trump is not now a lame duck, but an angry duck” who might reignite tensions regarding tariffs and military spending levels among NATO allies, said Carsten Brzeski, global chief of macro at ING Bank.
An optimistic perspective, Brzeski noted, is that Trump becomes “a tame duck … that he will slow down any disruptive efforts and that he will put more focus on trying to win the Nobel Peace Prize by ending the two big wars without big disruption, and on trade, nothing happens but a few words.”
Here’s a look at some of the moves rippling through financial markets:
Trump Media and Tesla are down
Trump’s social-media firm, Trump Media & Technology Group, was among the market’s notable decliners following the election, falling 9.1%. The stock had already entered the day down 55.1% for the year as Trump’s approval ratings softened.
After briefly reaching a high of $175 five years ago, the stock has slid toward $5. Its primary asset is Truth Social, a platform best known for hosting Trump’s posts.
Elon Musk’s companies also faced pressure. Tesla dropped 5.2%, and SpaceX declined 4.8%. Musk, a former high-level Trump adviser, is considered a potential target for investigations by a Democratic-led Congress.
AI stocks under pressure
Trump has been a vocal supporter of the AI industry, and a Democratic counterweight on Capitol Hill could lead to increased regulation or restrictions for the sector. Concerns regarding AI have been mounting across the political spectrum.
Investors view Democratic victories in Texas, including the gubernatorial race, as a potential factor that could slow the development of new AI data centers.
Nvidia, the chip manufacturer that became the face of the AI investment frenzy, fell 1.5% and served as the largest drag on the S&P 500. Advanced Micro Devices, another major chipmaker, saw a modest 0.3% gain despite reporting quarterly profits that significantly exceeded analyst expectations.
Democratic control of Congress could benefit companies in the solar and wind sectors. First Solar surged 15.1%, and Enphase Energy rose 12.1%.
Bond yields are down
In the bond market, Treasury yields retreated. This may indicate that investors perceive a lower risk of Washington adding to its already substantial debt burden.
Treasury yields had climbed throughout the summer, reaching multi-decade highs due to concerns over U.S. government debt, rising inflation, and other factors. A Congress controlled by Democrats could act as a barrier against further spending and tax cuts that would otherwise expand the federal deficit.
The yield on the 10-year Treasury declined to 4.92% from 4.95% late Tuesday.
