U.S. stock markets appeared Wednesday to be smiling upon the electoral “blue wave” — with most major indexes on the rise after Democrats won control of both the House and Senate.
The S&P 500, a broad index of 500 large U.S. companies, was up 1.6 percent at close Wednesday, on track for its biggest one-day gain since August 2026. The Nasdaq composite also was up 1.4 percent. The Dow Jones Industrial Average rose 3.1 percent, the best performance since April 2025.
The price of oil dropped. Brent crude, the global benchmark, fell to $95.22 from $117.67 on Oct. 30, its lowest price in more than two months.
In a research note, Morgan Stanley said the drop suggests market expectations that a Democratic Congress will make it harder for President Donald Trump to escalate the war with Iran, which has disrupted oil shipments from the Persian Gulf and pushed up energy prices. Morgan Stanley analysts wrote that markets were pricing in “stronger congressional resistance to renewed geopolitical escalation.”
Markets had been expecting a clear, if less dramatic Democratic win on election night, said Jeremy Richardson, a senior portfolio manager at RBC Global Asset Management.
A party split between the White House and Congress “will likely result in short-term policy stasis that will reduce regulatory uncertainty,” which is seen as good news for stock and bond investors, Richardson said.
The gains were uneven across industries. “There are more winners than losers, at least for a day,” said Mark Zandi, chief economist at Moody’s Analytics. Zandi said a Democratic Congress should help alternative energy companies, health care providers and consumer staples, while a more constrained Trump administration will hurt AI companies, defense contractors, and Trump- and Musk-linked businesses.
Solar companies were among the biggest gainers on Wednesday, with First Solar up 5 percent.
Artificial intelligence companies were among the losers. AI investment has become “a meaningful source of economic growth,” Oxford Economics wrote in a note on Wednesday. But shares of some AI companies fell after voters endorsed a slew of anti-data-center ballot initiatives, and Democrats who want to pause or limit data center construction won the governor’s races in Texas, Georgia and Ohio.
Defense contractors including Lockheed Martin and Northrop Grumman also fell.
Morgan Stanley’s note said markets were also pricing in “greater obstacles to AI-related investment” and “greater risk of targeted trade action.”
Elon Musk’s companies Tesla and SpaceX saw their stock prices battered, after Musk had spent hundreds of millions of dollars supporting GOP candidates in Tuesday’s elections. Tesla was off 3.5 percent and SpaceX down 5.4 percent in the early afternoon.
Still, the election’s effect on stocks and the economy “will ultimately be on the margin, as the economy’s prospects have changed little,” Zandi said.
correctionA previous version of this article misstated how much SpaceX’s stock price fell. It was down 5.4 percent, not 54.5 percent.
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