Stocks surged on Wednesday after Democrats secured commanding victories in key midterm races, ending political uncertainty that had weighed on markets. The tech-focused Nasdaq Composite rose 1.4%, the S&P 500 jumped 1.58%, its best day since August, and the Dow soared by 1,569 points, its strongest performance since April 2025. The Russell 2000, tracking small and mid-sized companies, gained 1.5%. However, shares of SpaceX and Tesla lagged, falling more than 3%, as Elon Musk had heavily backed Republican candidates.
Analysts attributed the rally to the clarity of the election results, which contrasted with previous years when projections took days to solidify. Deutsche Bank’s George Saravelos noted that a large Democratic majority in Congress, combined with President Trump’s willingness to work with the opposition, should temper extreme policy outcomes. Historically, stocks have risen a year after every midterm election since 1946, according to Truist’s Keith Lerner.
Economists at Goldman Sachs predicted that Democrats might now limit some of Trump’s economically disruptive actions, such as rolling back tariffs and reversing spending cuts. The price of oil, which had spiked due to the Iran war, dropped over 9%. However, the results posed risks for the AI boom, with Morgan Stanley strategists warning of potential data center restrictions. Several Democratic governors-elect, including Keisha Lance Bottoms in Georgia and Amy Acton in Ohio, have called for pauses in data center construction, which could affect about 45% of planned U.S. expansion.
Tech giants like Amazon, Microsoft, and Alphabet surged 6%, as investors believed they were best positioned with existing data center capacity. Apple also hit a record high. Meanwhile, shares of Trump Media & Technology Group plummeted 25% to an all-time low. Analysts cautioned that the impact of any data center moratoria would depend on details like grandfathering and relocation options, with Evercore’s Sarah Bianchi calling 2027 a potentially turbulent year for developers.