Wall Street soars: Dow Jones jumps more than 1,300 points after Democratic victory

Wall Street celebrated the Democratic victory in the midterm elections on Wednesday with a session of strong gains: the Dow Jones rose 1,307 points, or 2.5%, on track for its best day since April, while the S&P 500 gained 1.5% and the Nasdaq Composite advanced 1.7%, according to CNN.

The session began nervously: futures had fallen overnight, with the Nasdaq down as much as 2.4%, but they turned around after President Donald Trump accepted the results and said he was willing to work with the opposition. Investors embraced the certainty of a decisive outcome and the prospect of divided government, which can curb excessive spending and give markets a more predictable outlook. The VIX volatility index plunged 16%.

“The combination of a large Democratic majority in Congress and President Trump’s statement that he is willing to work with the opposition should act as a break on extreme policy outcomes and bring down risk premia,” wrote George Saravelos, global head of FX research at Deutsche Bank.

Among the day’s winners were health care, solar energy and consumer stocks, sectors that would benefit from a more stable environment. Shares tied to building data centers for artificial intelligence fell instead, on fears of tighter regulation and moratoriums: Nvidia dropped 1% and a fund tracking AI infrastructure stocks fell more than 7%. Tesla shares fell 3% and SpaceX 4% in private trading, after Democratic victories in Texas, where Elon Musk has based his companies.

The rally was also supported by jobs data: payroll processor ADP reported on Wednesday that private employers added 86,000 jobs in October.

Photo: A Lo Claro Archive

Source: CNN and Dow Jones Newswires / Morningstar