Stocks surge after midterm elections ease political uncertainty

The Dow Jones Industrial Average gained 3%, or 1,569.40 points, to close at 53,356.12 points.

The broader S&P 500 rose 119.7 points, or 1.6%, to 7,688.62 points.

The Nasdaq Composite advanced by 364.50 points (1.4%) to 25,736.51 points.

Democrats secured a majority in both houses of Congress on Tuesday night, dealing historic setbacks to the Republican Party in traditionally conservative strongholds. Many voters viewed the midterms as a referendum on the policies of Donald Trump since his return to power in January 2025.

Large technology companies saw gains as the prospect of a slower rollout of AI infrastructure potentially benefits them. Conversely, smaller firms involved in building data centers experienced losses.

Furthermore, speculation that the next Congress might push Donald Trump to swiftly end the war in Iran contributed to falling oil prices and bolstered investor confidence across a wider range of sectors.

The dollar weakened against a basket of currencies, while long-term U.S. Treasury yields declined.

The AI sector faced headwinds due to investor concerns about the massive spending by technology giants, according to Scott Chronert, director of strategy at Citi Research.

“If you change the speed at which data centers are built, you touch the fundamental trajectory of many providers,” he noted.

Microsoft and Amazon, major players in the AI space, both rose more than 6%, while Meta and Alphabet increased by 1.4% and 3.2% respectively.

Data center operators IREN and Hut 8, along with Applied Digital and Core Scientific, plunged.

The semiconductor index fell 3.1%, hitting a six-month low.

Nine of the eleven major S&P 500 sectors finished the session in positive territory, with energy experiencing the largest decline (4.8%).

SpaceX and Tesla, owned by Elon Musk, retreated by more than 3%. Musk spent nearly half a billion dollars supporting Republican candidates during the midterms, particularly in Texas, where the two companies are based.