New York Stock Exchange Rises on Democratic Midterm Victory

The New York Stock Exchange ended the day higher following the Democratic victory in the US midterm elections. At the close, the Dow Jones index rose 3.03% to 53,356.12 points, the S&P 500 index gained 1.58% to 7,688.62 points, and the Nasdaq index increased 1.44% to 25,736.51 points. According to unofficial results, Democrats won 54 seats in the Senate and 237 seats in the House of Representatives, securing a majority in both chambers of Congress. The Republicans' loss of their majorities in both chambers raised assessments that the Trump administration's ability to implement its legislative agenda could be limited and that political gridlock in Washington could increase. Expectations that comprehensive policy changes might remain more limited supported the rally in equities. President Donald Trump's statement accepting the election results and expressing readiness to work with Democrats also contributed to reducing political uncertainty. On the other hand, concerns that oversight and regulations on artificial intelligence could be tightened put pressure on shares of data center companies. Applied Digital shares fell 6.74%, and Core Scientific shares dropped 10.39%. Shares of SpaceX and Tesla, led by Elon Musk, who emerged as one of the Republicans' biggest supporters in the elections, also saw declines of 3.81% and 3.34%, respectively. As the Democrats' victory in Congress and Trump's acceptance of the election results reduced political uncertainty and risks, the US 10-year Treasury yield fell to 4.89%. Oil prices also experienced a sharp decline following the election results. US Vice President JD Vance attributed the Republican Party's midterm loss to the war with Iran and relations with Israel, while US President Trump said the defeat largely stemmed from the "Iran war" and the "cost of living" caused by the war, strengthening expectations that the war could end and accelerating the drop in oil prices. The January futures price of Brent crude fell more than 8% to $95.04 per barrel, while West Texas Intermediate (WTI) crude was traded at $88.48 per barrel. On the macroeconomic data front, labor market indicators were monitored ahead of the nonfarm payrolls data to be released on Friday in the US. Private sector employment increased by 86,000 in October, above market expectations. The Institute for Supply Management (ISM) services Purchasing Managers' Index (PMI) fell to 54.5 in October, below market expectations, indicating a slowdown in the sector's growth rate. Not investment advice.