Dow surges 1,100 points as Democrats take control of Congress

The U.S. stock market rallied sharply on Wednesday following the midterm election results in which Republicans lost their sole control of the federal government.

The Dow Jones Industrial Average climbed 1,112 points, or 2.1 percent, by 10 a.m. Eastern time. The S&P 500 index rose 1.8 percent, approaching its highest single-day gain in three months. The Nasdaq composite increased 2.4 percent during the same trading period.

Historical data shows that stocks typically perform well in the months following U.S. midterm elections, regardless of the political winner. Wall Street strategists had advised investors to focus on corporate profits and interest rates rather than election outcomes. Brian Jacobsen, chief economic strategist at Annex Wealth Management, noted that earnings generally outweigh elections in determining stock prices.

Investors appeared to favor the political outcome of a Democratic takeover of both the House and Senate. This split government structure is often preferred by markets because it limits the ability of any single party to enact major economic changes. However, President Donald Trump retains executive power over defense, foreign policy, and certain trade matters, leaving some uncertainty in the market.

Carsten Brzeski, global chief of macro at ING Bank, described two potential scenarios for the new political landscape. He suggested Trump could become an "angry duck" who restarts tariff tensions and disputes over NATO spending. Alternatively, he could become a "tame duck" who slows disruptive efforts and focuses on ending wars to win a Nobel Peace Prize, with minimal changes to trade policy.

Market moves reflected sector-specific risks and opportunities tied to the election results. Trump Media & Technology Group, the social media company owned by the president, dropped 9.5 percent. This loss followed a 55.1 percent decline for the year as Trump's approval ratings weakened. The company's stock, which once peaked at $175, is now trading near $5.

Companies linked to Elon Musk also struggled. Tesla shares fell 3.6 percent and SpaceX dropped 3 percent. Musk, a former top adviser to the president, is a potential target for investigations by the new Democratic-led Congress. In the artificial intelligence sector, Nvidia slipped 0.5 percent after an earlier 2.8 percent decline, while CoreWeave fell 6.8 percent. Advanced Micro Devices rose 3.4 percent after reporting stronger quarterly profits than analysts expected.

Green energy stocks performed well on expectations that Democratic control of Congress will support the industry. First Solar jumped 11.1 percent and Enphase Energy climbed 11.6 percent. In the bond market, the yield on the 10-year Treasury note fell to 4.92 percent from 4.95 percent the previous day. Global markets also reacted positively, with stocks rising 2.2 percent in Paris and Shanghai, and 1.8 percent in London. Japan's Nikkei 225 index fell 1.4 percent. Brent crude oil prices dropped 2.9 percent to $100.63 per barrel.