NEW YORK (AP) — U.S. stocks surged Wednesday after President Donald Trump’s party lost sole control of Washington in the midterm elections.
Regardless of who wins, stocks have generally performed well in the months since the U.S. midterm elections, with the S&P 500 up 1.8%. As of 2:06 p.m. ET, the Dow Jones Industrial Average was up 1,519 points, or 2.9%, and the Nasdaq was up 1.9%.
As Wall Street tries to separate winners from losers after widespread Republican losses, stocks of solar companies, dollar stores and hospital owners are leading the way. Meanwhile, investors see risks to Trump’s social media companies, the artificial intelligence industry and companies owned by Elon Musk, who has donated huge sums to the Republican Party.
The price of a barrel of Brent crude oil fell below $100 for the first time in nearly a month. Vice President Vance blamed the Republican midterm election defeat on the war with Iran, which sent oil prices soaring.
Wall Street strategists have been urging investors not to get caught up in the election because it may not matter to the broader market in the long run. Stock prices depend more on where corporate profits and interest rates go than on who controls what in Washington.
“Earnings trump elections,” said Brian Jacobsen, chief economic strategist at Annex Wealth Management.
Still, with Democrats set to control both the Senate and House of Representatives, Wall Street may have secured a preferred political prospect. Wall Street generally prefers divided control from Washington because it reduces the risk of economic change.
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Of course, much remains unpredictable, and Trump retains executive authority over key areas such as defense, foreign policy and, in some cases, trade.
Carsten Brzeski, global head of macro at ING Bank, said the pessimistic forecast could be that “Trump is now less of a lame duck and more of an angry duck” and that he could reignite tensions over tariffs and the level of military spending by the NATO alliance.
Brzeski said the optimistic view is that Trump will become “a tame duck… He will slow down any destructive efforts, he will be more focused on winning the Nobel Peace Prize by ending two major wars without major damage, and on trade, nothing will happen except a few words.”
Here are some of the measures affecting financial markets:
Trump Media and Tesla both fell
Trump’s social media company Trump Media & Technology Group was one of the market’s bigger losers, falling 16.6%.
Read more: Trump Media replaces Nunes as Truth Social CEO after stock price plunge leads to billions of dollars in losses
Since briefly peaking at $175 five years ago, it has fallen towards $5. Its main business is Truth Social, which is famous for Trump’s posts on the platform.
Elon Musk’s businesses are also in trouble. Tesla fell 2.4% and SpaceX fell 4.8%. Musk, a former senior adviser to Trump, is one of the targets of possible investigations by the Democratic-controlled Congress.
AI companies are generally facing pressure
Trump has been a strong supporter of the artificial intelligence industry, and a Democratic victory across the country could mean more regulation or restrictions. Overall, concerns about artificial intelligence are growing across political parties.
Investors in particular believe a Democratic victory in Texas could slow the construction of further artificial intelligence data centers. Artificial intelligence-related stocks were already under pressure on Election Day due to concerns that prices were too high.
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Nvidia, a chip company that has quickly become the poster child for the frenzy over artificial intelligence-related stocks, fell 1.8% and is the largest company in the S&P 500. CoreWeave is a company that rents out access rights to artificial intelligence chips to customers through the cloud. Its stock price fell 10.2%.
Another chip giant, Advanced Micro Devices, performed better. The company’s shares rose 0.1% after the company reported its latest quarterly profit was well above analysts’ expectations.
Companies that have been investing heavily in AI chips have also performed better. Alphabet, for example, rose 4% on Thursday after plunging more than 12%, its worst ever, on concerns it was spending too much on investments in artificial intelligence.
Defense stocks fall
A Democratic-led Congress could push Trump to withdraw from the war with Iran.
That sent shares of companies that make weapons and other equipment for the U.S. military down, with Lockheed Martin down 7%, Northrop Grumman down 4.2% and General Dynamics down 2.4%.
Green power companies rise, oil prices fall
Democratic control of Congress could chart the way for companies in the solar and wind industries. First Solar rose 5.8% and Enphase Energy gained 4.7%.
Meanwhile, shares of major oil companies fell. Exxon Mobil fell 4.9% and ConocoPhillips fell 5.6%. Oil prices have been rising for much of the year after Trump and Israel went to war with Iran, sending crude prices sharply higher.
Brent crude, the international standard, plunged 8.6% to $94.70 on Wednesday.
Prices for Brent, the most actively traded contract on the market, have fluctuated between about $70 and $120 a barrel since the eve of the war with Iran.
Healthcare stocks and dollar stores also rose
The Democratic-led Congress may try to reverse federal health care and food aid cuts that Republicans approved this summer in “a beautiful bill.”
That helped stocks rise across the healthcare sector, with HCA Healthcare, which operates hospitals and ambulatory sites, rising 9.6%.
watch: Health care costs a major concern for voters ahead of midterm elections
Retailers are also benefiting from hopes that Democrats might introduce policies to help Americans cope with the rapidly rising cost of living. Dollar Tree, which has a particular focus on low-income Americans, was one of the market’s bigger gainers, rising 8.9%.
Bond yields fall
In the bond market, Treasury yields have fallen. That could be a sign that investors believe Washington will be less at risk of piling more debt on its already massive mountain as one-party control comes to an end.
Read more: More volatility in bond yields roils global financial markets
U.S. Treasury yields surged over the summer to their highest levels in decades amid worries about the U.S. government’s massive debt, rising inflation and other worries. A Democratic-controlled Congress could put checks and balances on spending increases and tax cuts to avoid widening Washington’s deficit.
The 10-year Treasury yield fell to 4.89% from 4.95% late Tuesday.
Stock markets rise in much of world
Indexes are climbing across much of the world. Paris stocks rose 2%, Shanghai stocks rose 2.2% and London stocks rose 1.8%. Japan’s Nikkei 225 Index had an unusual performance, falling 1.4%.
Associated Press writers Elaine Lai contributed to this report in Hong Kong and McHugh contributed in Frankfurt, Germany.
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