Stocks rally as Wall Street tries to sort winners from losers following Republican wipeout
NEW YORK (AP) — The U.S. stock market is rallying as Wall Street tries to sort the winners from the losers following stunning losses for President Donald Trump’s party in the midterm elections. First Solar soared, while companies controlled by Trump ally Elon Musk fell. The parent company of Trump’s social media company plunged. The S&P 500 jumped 1.1% in early trading Wednesday and was potentially on track for its best day in six weeks. The Dow Jones Industrial Average soared 983 points, and the Nasdaq composite rose 1.7%. Treasury yields fell in the bond market.
THIS IS A BREAKING NEWS UPDATE. Check back for updates. AP’s earlier story follows below.
FRANKFURT, Germany (AP) — U.S. stock futures surged Wednesday after the U.S. midterm election yielded Democratic majorities in both houses of Congress. Investors parsed the potential impact on artificial intelligence, the defense and wind energy sectors, as well as Big Oil.
The results usher in a new era of congressional resistance to the agenda aggressively pursued by U.S. President Donald Trump. One overarching theme was that divided government might not be such a bad thing.
Markets generally prefer that control of Washington be split between Republicans and Democrats. That is seen as offering less risk of sweeping policy changes that could upend the economy.
“The magnitude of the gains for the Democrats in the midterms does not change too much for the near-term policy outlook, given the party still lacks a filibuster-proof majority in the Senate and President Trump has veto power to block legislation,” Stephen Brown of Capital Economics said in an analysis.
Some Asian markets briefly retreated amid concerns that the Democrats might slow the buildout of AI because of safety concerns and local resistance to data centers. Investors have questioned whether a major run-up in stock prices for artificial intelligence companies signals a bubble in the sector.
Dow Jones futures traded 1.4% higher and S&P 500 futures gained 1%. Nasdaq Composite futures rebounded from an earlier AI sell-off, gaining 0.54%. Wind energy stocks rose. Defense stocks were largely in retreat on the possibility that the war in Iran will be dialed back.
Much remains impossible to predict, since Trump retains executive authority over key areas such as defense, foreign policy and in some instances trade.
A downbeat forecast could be that “Trump is not now a lame duck, but an angry duck" who might restart tensions over tariffs and NATO allies' levels of military spending, said Carsten Brzeski, global chief of macro at ING Bank.
An optimistic view, Brzeski said, is that Trump becomes "a tame duck ... that he will slow down any disruptive efforts and that he will put more focus on trying to win the Nobel Peace Prize by ending the two big wars without big disruption, and on trade, nothing happens but a few words."
In Asia, Japan’s Nikkei 225 dipped 1.4% to 62,188.63 while Taiwan’s Taiex lost 0.8%. South Korea’s Kospi index rose 0.6% to 5,683.80, as memory chipmaker SK Hynix edged 0.1% lower, while Samsung Electronics slid 0.7%. Japanese memory chipmaker Kioxia Holdings tumbled 5.4%.
In early European trading, the CAC 40 in Paris rose 1.6% to 8,148.42. Britain’s FTSE 100 was up 1.25% to 10,770.95, and Germany’s DAX climbed 1.5% to 26,249.34.
The price of Brent crude, the international standard, fell 1.2% to $102.35 per barrel, while U.S. benchmark crude oil gave up 0.8% to $95.31 per barrel.
The U.S. dollar fell to 158.30 Japanese yen from 158.69 yen. The euro rose to $1.1255 from $1.1194.
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