A Democratic sweep of Congress heralded a new political era in Washington and reverberated across global markets, with stocks and bonds rising as the dollar fell.
In a sharp reversal, equities rebounded from losses in early trading. The S&P 500 climbed 1.1%. While most tech megacaps gained after a recent rout, a gauge of smaller companies added about 2%. Treasury yields dropped across the curve. The greenback weakened the most in two months. Gold topped $4,000. Oil slipped.
Investors appeared willing to look past the political upheaval, betting the main drivers of US growth, from consumer spending to the artificial-intelligence boom, would remain intact. Political gridlock could curb further fiscal expansion and ease pressure on bonds, offering support for stocks.
Democratic gains could complicate data-center development in some states, though investors see little immediate threat to the broader AI investment picture.
“Stocks have historically tended to rally after the midterms regardless of the outcome, as fading uncertainty brings relief to markets,” said Justin Buell at Continuity Group.