Stocks Rally As Midterm Election Results Match Expectations – U.S. Commentary

Stocks Rally As Midterm Election Results Match Expectations – U.S. Commentary

Stocks showed a significant move to the upside during trading on Wednesday, adding to the gains posted in the previous session. With the continued upward move, the Dow and the S&P 500 reached their best closing levels in nearly a month.

The major averages ended the day just off their highs of the session. The Dow surged up 545.29 points or 2.1 percent to 26,180.30, the Nasdaq soared 194.79 points or 2.6 percent to 7,570.75 and the S&P 500 spiked 58.44 points or 2.1 percent to 2,813.89.

The rally on Wall Street came as the results of the highly anticipated midterm elections on Tuesday came largely in line with expectations.

Democrats are projected to retake control of the House for the first time since 2010, as Democratic candidates managed to flip a number of suburban districts across the country.

Control of the House will give Democrats subpoena power, potentially leading to numerous investigations of President Donald Trump’s administration.

House Democrats will also play a much larger role if Trump hopes to achieve any major legislative accomplishments in the next two years.

Meanwhile, Democrats did not fare as well as in the Senate, as Republicans appear poised to expand their majority in the upper chamber.

Republican candidates won Democratic Senate seats in Indiana, Missouri, and North Dakota and are leading in tight races in Florida and Arizona.

The GOP had been seen as likely to maintain control of the Senate due to the tough map faced by Democrats, who were defending 26 of the 35 seats on the ballot.

With Republicans expanding their majority, Trump will likely have an easier time pushing through more controversial judicial nominees.

Despite Republicans losing control of the House, Trump described the night as a “tremendous success” in a post on Twitter.

Sector News

Software stocks showed a substantial move to the upside on the day, driving the Dow Jones Software Index up by 4 percent. The jump lifted the index to its best closing level in a month.

Considerable strength also emerged among retail stocks, as reflected by the 3.6 percent spike by the Dow Jones Retail Index.

Healthcare stocks also turned in a strong performance, resulting in a 2.9 percent advance by the Dow Jones Health Care Index.

DaVita (DVA) and Fresenius Medical Care (FMS) posted standout gains after California voters rejected a ballot measure that would have capped dialysis payments from insurance companies

Transportation, pharmaceutical, brokerage and chemical stocks also moved notably higher on the day, while gold stocks were among the few groups to buck the uptrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index fell by 0.3 percent, while Hong Kong’s Hang Seng Index inched up by 0.1 percent.

Meanwhile, the major European markets all moved notably higher on the day. While the German DAX Index advanced by 0.8 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index surged up by 1.1 percent and 1.2 percent, respectively.

In the bond market, treasuries pulled back near the unchanged line after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 3.213 percent.

Looking Ahead

Trading on Thursday is likely to be driven by reaction to the Federal Reserve’s monetary policy announcement due tomorrow afternoon.

The Fed is widely expected to leave interest rates unchanged, but traders will keep a close eye on the accompanying statement for clues about an expected rate hike in December.

The announcement from the central bank is likely to overshadow the Labor Department’s report on weekly jobless claims.

On the earnings front Hostess Brands (TWNK), Keurig Dr Pepper (KDP), News Corp (NWSA), Qualcomm (QCOM), and Take-Two (TTWO) are among the companies releasing their quarterly results after the close of today’s trading.

AstraZeneca (AZN), Cardinal Health (CAH), Crocs (CROX), Dillard’s (DDS), D.R. Horton (DHI), and Party City (PRTY) are also among the companies due to report their quarterly results before the start of trading on Thursday.

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