Democrats Win Congress, the Dow Soars 1,569 Points, and Chip Stocks Sink

The Dow jumped 1,569 points, its best day since April 2025, after Democrats won control of Congress

The Dow Jones Industrial Average rose 1,569.40 points, or 3.03%, to 53,356.12 on Wednesday, the day after the midterm elections. It was the index's best percent day and its largest point gain since April 9, 2025, when it rose 7.87%, or 2,962.86 points.

Democrats won majorities in both the House and the Senate and took governor's races in states including Texas, Ohio, Georgia, Iowa and Nevada. Two Senate races, Alaska and Mississippi, were still uncalled at the close.

The Dow is not at a record. It remains 1.83% below its Aug. 5 record close of 54,349.12. Wednesday was its first close above 53,000 since Sept. 4, and it finished near the day's high of 53,492.40.

Why the Dow outran the S&P 500

The Dow's gain was nearly twice the S&P 500's 1.58%, the widest gap in the Dow's favor since Jan. 27, 2025. Most of its members took part: 27 of the 30 rose.

The Dow is weighted by share price, so a few names mattered most. By our arithmetic:

• Microsoft added about 207 points, Goldman Sachs about 190, Sherwin-Williams about 135, Home Depot about 129 and Apple about 105.
• Caterpillar, down 5.23%, took away about 194 points, Chevron about 49 and Nvidia about 39.

How it compares

In data going back to 2004, this is the Dow's largest gain on the day after a midterm election; the next largest was 2.13% on Nov. 7, 2018. After any November election, Nov. 6, 2024 was larger, at 3.57%. CFRA Research said during Wednesday's session that the Dow was set for its biggest post-midterm single-day gain since 1982.

What it could mean

Stocks have often done well in the months after midterm elections, whichever party wins, and a Dow this close to its August record could draw in more buyers if it breaks through. But a gain that leaned on a few high-priced stocks may say less than the point total suggests, and relief after an election can fade once the policy fights begin.

Was Wednesday the start of a new run at the record, or a one-day release of election nerves?

The close: the S&P 500 rose 1.58% and the Nasdaq 1.44%, reversing an overnight slide

Overnight the picture looked very different. As the results came in, Nasdaq-100 futures fell to their lowest since July 30. Japan's Nikkei closed down 1.42% after being down more than 4%, while South Korea's Kospi closed up 0.62%. By the U.S. close the major indexes were all higher:

• S&P 500: 7,688.62, up 119.70, or 1.58%. Its best day since Aug. 4 and highest close since Oct. 29, still 1.67% below its Oct. 6 record.
• Nasdaq Composite: 25,736.51, up 364.50, or 1.44%. Its best day since Sept. 21. It was up as much as 2.67% at the high and is 6.75% below its record.
• Dow: 53,356.12, up 1,569.40, or 3.03%.
• Russell 2000: 2,856.95, up 44.50, or 1.58%. Its best day since Oct. 20.
• VIX: 16.61, down 4.22, or 20.26%. Its largest one-day percent fall since April 9, 2025, and its lowest close since Oct. 15.

The shape of the day

Big-tech gains faded after the morning while the Dow held near its high. The rally was broad but not universal: 376 S&P 500 stocks rose and 127 fell, and the median stock gained 2.57%, more than the index. Eight of the 11 sector funds rose, led by consumer discretionary (+4.26%). Technology was flat (-0.01%), industrials fell 1.10% and energy fell 4.71%.

Rates, oil, gold, bitcoin

• The 10-year Treasury yield fell to about 4.9%.
• WTI crude settled at $88.12, down 8.3%. Brent settled at $94.62, down 8.7%.
• Gold rose 3.43% to about $4,075, back above $4,000.
• Bitcoin was about $80,000, up about 3%.
• The dollar index fell 0.36% to 101.5, its lowest close since Sept. 30.

The mood

CNN's Fear & Greed gauge read 27.3 just after the close, up from 19.1 at Tuesday's close and still labeled "fear."

What it could mean

Very low sentiment has often come before rebounds, and a gauge still reading "fear" after a day like this could mean many investors have not yet joined in. A sharp one-day drop in the VIX can also reverse quickly, though, and the S&P 500 and the Nasdaq both remain below their Oct. 6 records.

Does a "fear" reading on the Dow's best day since April 2025 leave room for more gains, or does it show that investors do not yet trust the rally?

Why stocks rose on a result many feared: strategists pointed to gridlock and the president's tone

Before the vote, JPMorgan said a blue wave could knock the S&P 500 "by about a half percent on Wednesday." Earlier this year, Michael Hartnett of Bank of America warned that Democrats winning the Senate and the Texas governorship could lead to a "big slump" in stocks of more than 10% into year-end. On Wednesday the S&P 500 gained 1.58%.

Strategists offered several explanations. Jay Woods, chief market strategist at Freedom Capital Markets, said the rebound "was in part due to the president's initial tone and reaction to the results," and added:

"Still more uncertainty looms, but one thing is certain, there will be gridlock and historically this is good for the market."

Andrew Slimmon of Morgan Stanley Investment Management said the markets "like gridlock — they don't like a party with too much power." Brian Jacobsen of Annex Wealth Management put it more briefly: "Earnings trump elections."

What the president said

President Trump, speaking to reporters on Wednesday:

"Look, I mean, I'll get along probably with the Democrats unless they want to be destructive."

In a Fox News interview overnight, he said, "They'll send over things that are insane, and I'll veto them." In a brief phone call with CNBC's Eamon Javers, he said he can work with Democrats on "many more things than people understand," including "a lot of financial ideas that would be mutually good." On tariffs, he told Javers: "If I took tariffs off — we have 3,000 plants under construction right now. Every single plant would stop building."

Carsten Brzeski of ING offered two versions of what comes next: a downbeat one, "Trump is not now a lame duck, but an angry duck," and an optimistic one, "a tame duck."

What it could mean

If gridlock holds, fewer large policy changes could leave earnings and interest rates to set prices, a setting stocks have often favored. It could cut the other way if veto fights, a shutdown or a debt limit standoff turn gridlock into disruption, or if renewed tension over tariffs returns.

Is gridlock a lasting support for stocks, or a relief that fades with the first fight in Washington?

The chip index fell 3.13% to its lowest close since April, even as most stocks rose

The PHLX Semiconductor Index fell 3.13% to 10,268.65, its lowest close since April 28. It now sits 29.83% below its record close of 14,634.72 on June 22.

• Sandisk fell 7.91%, Marvell 7.08% and Micron 7.00%.
• Nvidia fell 3.17% to $200.13, its lowest close since July 30.
• Broadcom fell 2.00%.
• AMD was the exception, closing up 1.01% at $488.78 after a record quarter reported Tuesday night, though it gave back most of its morning gain.

The Technology sector fund was flat (-0.01%), and the median technology stock in the S&P 500 fell 0.66%. The Nasdaq-100, which fell into correction territory at the end of October, rose only 0.91% and is 8.93% below its record.

Two markets at once

Across most of the market, the day looked very different. In the S&P 500, 376 stocks rose and 127 fell, and the median stock gained 2.57%, against 1.58% for the index.

The equal-weight S&P 500 fund (RSP) rose 1.87% to 223.36, a record close above its old mark of 222.77 from Aug. 14, and its best day since April 8. The S&P 500 itself, weighted by company size, is 1.67% below its own record. The consumer staples, health care, financials and materials sector funds also closed at records.

Dan Ives of Yorkville Ives & Co. wrote that Democratic control "will create some major hurdles for AI and tech legislation in the Beltway over the next 2 years." Speaking of the market as a whole, Andrew Slimmon of Morgan Stanley Investment Management said the markets "like gridlock."

What it could mean

Money moving out of chips and into the rest of the market can lift more stocks and leave the broad market on a firmer footing, even while the old leaders lag. But chips have led this bull market, and lasting weakness in those leaders could spread to the rest.

Is this a rotation that lifts the market, or a breakdown that spreads?

Texas elected a governor who promises a data center moratorium, and AI build-out stocks fell

Democrat Gina Hinojosa defeated Gov. Greg Abbott in Texas, and she has pledged an immediate moratorium on data centers in the state. Whether it happens is not known. According to Wells Fargo, 27% of planned U.S. data center gigawatts are in Texas. Democrats also won or kept the governor's offices in Georgia (7%, by the same estimate), Ohio and Pennsylvania (5% each).

Voters sided against data centers in 40 of 41 local ballot measures on Tuesday, CNBC reported, and 56% of voters in a CNBC Voter Poll said data centers were a crucial or major factor in their vote.

Companies tied to data centers slid as traders prepared for a slower build-out:

• Comfort Systems fell 15.22% and Vistra 13.86%.
• Iren fell 11.24%, CoreWeave 9.90% and Nebius 6.67%.
• GE Vernova fell 9.30%.

During Wednesday's session, CoreWeave's five-year credit default swaps stood at 1,139.7, above the 1,000 level generally seen as signaling distress, and the yield on its 2031 bond was 15.919%. The cost of insuring AI borrowers' debt has jumped as much as 80% since August, Yahoo Finance reported. CoreWeave and Nebius report earnings next Wednesday.

Two camps

Dan Ives of Yorkville Ives & Co. called Texas the "biggest worry" of the night and wrote:

"There is no way to sugarcoat that Democrats taking control especially over the Senate will create some major hurdles for AI and tech legislation in the Beltway over the next 2 years."

Others see room for a deal, or even a benefit. Wells Fargo Investment Institute wrote, "We still believe both parties have an incentive to compromise on data center location and AI generally." Joseph Brusuelas, chief economist at RSM US, wrote, "It is necessary that the investment in AI slow to a more sustainable pace. It is in the interest of the AI trade itself." Aditya Bhave of Bank of America wrote, "A slower buildout isn't entirely a bad thing."

What it could mean

A moratorium or long delays in Texas could raise costs for smaller AI cloud companies and weigh on power and equipment makers. A slower build-out could also help the cash flow of the largest spenders and make the boom more durable, and a compromise on where data centers can go would ease the pressure.

Is the Texas result a lasting brake on the AI build-out, or a scare that a compromise will resolve?

Microsoft and Apple closed at records, and healthcare, banks and consumer stocks rallied

Five of the Magnificent Seven rose, and two of them closed at records.

• Microsoft rose 6.68% to $555.80, a record close (the old one was $543.45 on Oct. 13).
• Apple rose 5.31% to $349.51, a record close (the old one was $348.91 on Oct. 29), after touching an all-time high during the session.
• Amazon rose 6.12% to $266.03, still 6.33% below its Aug. 3 record close.
• Alphabet rose 3.18% and Meta 1.44%. Nvidia and Tesla fell.

Laura Martin of Needham wrote, "We believe higher regulatory barriers entrench incumbents, and increase risks (and raise required ROICs) for new entrants," adding, "Hyperscalers are AI incumbents." On Apple, Evercore ISI's Amit Daryanani wrote, "This is THE name to keep working when investors want to get defensive," and suggested a data center slowdown could temper the memory chip prices that have weighed on the company.

Healthcare

Healthcare companies rallied on optimism over a slowdown or reversal in healthcare spending cuts and the possible extension of enhanced Affordable Care Act subsidies. Centene rose 12.63%, Universal Health 10.93%, HCA 10.39% (its best day since July 22, 2022) and Molina 8.90%. The health care sector fund rose 3.07% to a record close.

Consumers, banks and solar

Affordability was a big theme in the election, and a consumer relief trade took hold. Dollar Tree rose 9.64%, United Airlines 7.98% and Walmart 3.45%; the homebuilder fund ITB rose 7.26%. The consumer staples fund rose 3.38% to a record close.

Banks joined in: JPMorgan rose 4.22%, Bank of America 3.97% and Goldman Sachs 3.59%, and the financials fund rose 3.46% to a record close.

Solar names rose on hopes that Democrats will push back against the administration's rejection of clean energy policies: Nextpower rose 11.12%, First Solar 4.63% and the solar fund TAN 5.65%.

What it could mean

If the election's focus on affordability and healthcare funding turns into policy, hospitals, insurers and consumer stocks could keep benefiting. But these gains rest on hopes, the president still holds the veto, and a rally built on expected policy can reverse if bills stall. Stocks that reach records on a single large jump can also attract profit-taking.

Are these winners the market's next leaders, or simply where money went for a day?

Defense and energy stocks fell, and Trump Media lost nearly 25%

Not everything rose. Defense, energy and companies tied to President Trump and Elon Musk had a hard day.

Defense

Shares fell on concern that a Democratic Congress could challenge military spending. Lockheed Martin fell 6.95% to $594.57, Northrop Grumman 4.50% and General Dynamics 2.57%; drone maker Kratos fell 12.27%. The administration has requested $1.5 trillion for national defense in fiscal 2027, plus an $87.6 billion supplemental for fiscal 2026, largely because of the Iran conflict.

Myles Walton of Wolfe Research wrote, "A Democratic sweep is a headline negative for defense stocks," but said the initial reaction should be "potentially short-lived," pointing to a past case in which contractors recovered from an election-driven sell-off as military spending kept rising.

Energy

The energy sector fund fell 4.71% as oil dropped, its third straight loss and its worst day since April 10, 2025. Exxon fell 4.50% to $169.47 and ConocoPhillips 5.17%.

Trump Media and Elon Musk's companies

Trump Media & Technology Group fell 24.54% to $4.49, its worst day since Jan. 24, 2024. President Trump owns 41% of the company, which briefly touched a peak of $175 five years ago.

Tesla fell 3.34% and SpaceX 3.81% to $135.92. Elon Musk spent at least $474 million backing Republican candidates in the midterms, including $224 million in Texas. The Associated Press reported that Musk is among the possible targets for investigations by a Democratic-controlled Congress.

Other large declines

Also among the S&P 500's biggest losers, with no reason tied to them in the reporting we read: NRG, down 13.58%; Texas Pacific Land, down 13.57%; Vertiv, down 12.88%; Flex, down 12.33%; Quanta, down 11.67%; and Eaton, down 9.99%.

What it could mean

If a Democratic Congress trims military budgets or presses for an end to the war, defense and energy profits could come under pressure for some time. A past sell-off of this kind reversed when military spending kept rising, and cheaper oil that hurts producers can help consumers and the wider market.

Is the sell-off in these groups an overreaction to the headlines, or the first pricing of a different Washington?

Oil fell more than 8% after Vance wrote, "The reason we lost is the war"

U.S. crude settled down 8.3% at $88.12 a barrel, and Brent settled down 8.7% at $94.62, after Vice President JD Vance wrote on social media:

"The reason we lost is the war. The president himself said so last night."

It was oil's second fall of more than 7% in three sessions, and it has fallen all three days this week. Measured on a single contract, WTI is down about 15% this week and Brent about 16%. WTI's December contract closed at its lowest since Oct. 7, and Brent's January contract at its lowest since Sept. 29. Crude gained more than 10% in October as the market priced in the risk of escalation after the elections, and it remains about 50% above where it started the year.

Deal or escalation

The war has disrupted global energy supplies for eight months. Analysts disagree about what the election changes.

• A deal: "The elections are leading the market to conclude that Trump might now be inclined to make a deal," said Andy Lipow, president of Lipow Oil Associates. Peter Boockvar of One Point BFG Wealth Partners said, "There's just going to be even more pressure to end the war."
• Too far, too fast: Rebecca Babin, senior energy trader at CIBC, said the sell-off "could be getting a bit overdone."
• Escalation: Bob McNally, president of Rapidan Energy, said the odds still favor military escalation. "Iran is hardened in its uncompromising position," he said.

Trump told the Financial Times on Tuesday that he has no immediate plans to strike Iran. Mark Hackett of Nationwide said oil is retreating "on hopes for a deescalation in the Iran conflict, even as the diplomatic signals remain ambiguous."

Supply is still tight in places: U.S. diesel stockpiles are at their lowest since 2003.

What it could mean

A deal, or even a smaller risk of escalation, could keep oil falling, easing inflation and the pressure on consumers and bond yields, which tends to support stocks while hurting energy producers. Escalation could send oil sharply higher and undo much of Wednesday's move, and a market that has fallen this quickly may be exposed to any bad headline.

Is oil pricing in a peace that has not happened yet, or has the risk of escalation truly faded?

Bonds and gold rose while the dollar fell, and a debt limit fight now looms

The 10-year Treasury yield fell to about 4.9%, and the 30-year yield fell to about 5.28%. Treasury yields fell as oil dropped and took pressure off inflation, and the move could also signal that investors see less risk of more federal debt with the end of one-party control.

Traders at JPMorgan said one of the issues Wall Street is focusing on is "reduced deficit spending," adding, "This can be achieved by asserting power over the budget and likely wading through a government shutdown." JoAnne Bianco of BondBloxx said "a more divided policy environment should make deficit growth more difficult and potentially improve the fiscal outlook."

The fight ahead

A CNBC analysis points to the next test: the debt limit. The Treasury is likely to hit its maximum borrowing capacity by midsummer 2027, according to the Bipartisan Policy Center, and Democrats are preparing to seek concessions in exchange for raising it. "It's not our base case, but we think the risk is higher than ever that you could get a technical default from the government," said Robert Sockin, chief U.S. economist at PGIM.

Gold, the dollar and bitcoin

• Gold rose 3.43% to about $4,075, its best day since Aug. 5 and its first close above $4,000 since Oct. 29.
• Silver rose about 5.6% to about $52.40, its best day since June 12.
• The dollar index fell 0.36% to 101.5, its lowest close since Sept. 30. Thierry Wizman of Macquarie said a data center slowdown could matter here, because "any politically driven slowdown would be adverse for the U.S. dollar."
• Bitcoin was about $80,000, up about 3%, after briefly falling to the $75,000 level. Ed Groshans of Compass Point expects Elizabeth Warren to chair the Senate Banking Committee and wrote, "Warren is opposed to cryptoassets." Bitfinex cautioned, "Sustaining this bounce requires actual spot demand."

What it could mean

Less deficit spending and cheaper oil could keep long-term yields falling, which could help stocks and housing. A debt limit fight could do the opposite, pushing long-term yields up and unsettling stocks. Gold may gain from that uncertainty and a softer dollar, though higher rates could limit the move.

Will a divided Washington bring yields down, or will the fight over the debt limit push them back up?

Duolingo rose 26% and FIS fell 24% on earnings; after hours, AppLovin jumped and Qualcomm fell

The regular session

• Duolingo rose 25.99% to $161.27. Third-quarter revenue of $309 million topped the $303 million consensus, and daily active users rose 29% to 64.9 million.
• Block rose 15.24% to $87.58 after beating estimates and raising full-year guidance: adjusted earnings of $1.13 a share against $1.03 expected, revenue of $6.72 billion against $6.59 billion.
• Booking rose 9.83% after better-than-expected results.
• McDonald's rose 6.58% to $280.34. Adjusted earnings of $3.57 a share beat the $3.38 estimate and revenue of $7.16 billion missed the $7.29 billion estimate. U.S. same-store sales fell 0.2%, less than the 0.5% expected, the first decline in six quarters.
• Fidelity National Information Services (FIS) fell 23.65% to $29.77, the S&P 500's worst performer and the stock's lowest close since 2012, after cutting its full-year adjusted earnings outlook to $5.82-$5.89 a share from $6.15-$6.24.
• Trimble fell 17.31% after lowering its organic annual recurring revenue growth outlook for 2026 to about 10% from 12% to 14%.
• Datadog fell 14.42% after beating estimates but giving soft revenue guidance.

Away from earnings, CVS fell 12.54% after saying it will split into two public companies by the first half of 2028, reversing its Aetna deal. Helen of Troy rose 25.39% to $37.04 after Empower Brands disclosed a $37-a-share takeover proposal, which Helen of Troy confirmed its board had rejected.

Other large S&P 500 gains, with no reason in the reporting we read: Mosaic, up 17.35%; Zimmer Biomet, up 13.42%; Moderna, up 13.11%; Stanley Black & Decker, up 13.02%; and CDW, up 12.67%.

After the bell (prices at 4:54 pm ET, still moving)

• AppLovin was up 19.69%, on top of a 10.69% regular-session gain. Record third-quarter revenue of $2.185 billion rose 55%, and fourth-quarter revenue guidance is $2.365 billion to $2.395 billion.
• Qualcomm was down 5.46%, after a 5.33% regular-session gain. Results topped estimates, but handset chip sales fell 26% to $5.14 billion. The current-quarter forecast is $2.15 to $2.35 a share against a $2.27 estimate. CEO Cristiano Amon, on the data center business: "We don't have a demand issue; it's a supply issue."
• Arm was down 1.98%, after a 5.28% regular-session loss. It reported record fiscal second-quarter revenue of $1.44 billion.

What it could mean

Large gains on strong results could support the view that earnings still matter more to stocks than politics. The steep drops in FIS, Trimble and Datadog show the other side: investors have been quick to punish weak guidance, and more cuts could weigh on the rally.

Which will matter more to this market from here: earnings or Washington?

Private employers added 86,000 jobs in October, and the government's jobs report is due Friday

Private employers added 86,000 jobs in October, ADP reported, slightly ahead of the Dow Jones estimate of 75,000 and the same as the downwardly revised September total.

Trade, transportation and utilities led with 39,000, followed by education and health services with 28,000 and leisure and hospitality with 19,000. Professional and business services lost 27,000. Pay for workers changing jobs rose 4.8% from a year earlier, while pay for those staying rose 3%.

"Employers of all sizes were hiring last month," said Nela Richardson, ADP's chief economist.

Services slowed

The Institute for Supply Management's services index fell to 54.5 from 54.9 in September, just below the 54.8 economists expected, though still in expansion territory. New orders dropped 3.9 points to 55.9, and employment rose to 51.4 from 50.1. The prices paid measure eased to 73.0 from 74.0, still elevated.

Friday

The government's jobs report for October comes out Friday. Economists surveyed by Dow Jones expect a gain of 59,000, after 29,000 in September.

What it could mean

A firm report could support the view that the economy can carry stocks through the political noise, but with prices still elevated it could also keep long-term yields high and the Federal Reserve cautious. A weak report could lower yields while raising new worries about growth.

Would a strong jobs number on Friday be good news for stocks, or bad news for rates?