Dow posts best day in 19 months as investors cheer removal of midterms uncertainty

Wall Street ended with big gains on Wednesday, following a Democratic sweep of both chambers of Congress in the midterm elections. Investors shrugged off any potential policy ramifications and cheered the removal of a major uncertainty in terms of market catalysts.

The benchmark S&P 500 jumped 1.6% to close at 7,689.58 points, while the tech-heavy NASDAQ Composite gained 1.4% to settle at 25,736.51 points. The blue-chip Dow Jones Industrial Average soared 3% to conclude at 53,357.19 points, notching its best intraday performance since April 9, 2025.

"One of the most well-worn sayings on Wall Street is ’markets hate uncertainty.’ Until this morning, markets were a bit worried about the results of midterm elections. I think more so about the possibility of challenges. The overwhelming victory by Democrats ends the uncertainty and historically markets have done reasonably well after mid-term elections no matter which party ’won,’" Peter Tuz, president at Chase Investment Counsel, told Investing.com.

Democrats secure decisive victory

Figures from the Associated Press showed the Democrats securing a majority in both the Senate and the House of Representatives, even with some votes still yet to be counted.  

In the 100-seat Senate, Democrats have won 54 seats, with two races still to be called, according to AP projections. Democrats have also seized 228 seats in the House of Representatives, surpassing the 218-seat threshold needed to have a majority in the lower chamber.

Notable Democratic victories included James Talarico taking winning in a Senate race in the traditional Republican stronghold of Texas, along with Abdul El-Sayed emerging victorious in a Senate race in the key swing state of Michigan. The Democrats flipped at least seven seats from the Republicans in the Senate. 

The outcome represents a sharp repudiation of the first two years of President Donald Trump’s second term, a time during which Republicans held slim majorities in the House and Senate. At least some Democratic approval will now be required for legislation to pass through Congress from January, although Trump will retain his ability to veto bills without the threat of a Congressional override.

Trump told The New York Times that he was willing to accept the election results, and that the only reason his Republican Party underperformed was because he was not on the ballot. Polls before the election suggested growing disapproval of Trump and the Republicans, with voters discontent over high fuel prices, rising inflation, and a prolonged war with Iran.

U.S. Vice President JD Vance in a lengthy social media post blamed the Iran war for the Republican losses. 

"The reason we lost is the war. The president himself said so last night. If you’d like to argue it was worth it, that losing the Senate for the next 6 years was worth it, then do so. Argue it was a worthwhile cost to pay. Agree or disagree, that’s at least honest," Vance said.

Data center names slide 

While Wall Street’s rally on Wednesday appeared broad-based, there were some specific moves linked to the midterm results. Most notably, stocks of data center operators and companies that provide AI infrastructure slumped amid expectations that Democrats would now be able to slap more stringent regulations on the AI industry and slow the rapid development of the nascent technology. Nebius ended 6.7% lower, CoreWeave slid 9.9%, and IREN slumped 11.2%.

AI, particularly the threat of possible job losses and the proliferation of massive data centers, had been seen as another major issue plaguing voters ahead of the midterms. While any immediate legislative changes to AI and tech regulation under Democratic control of both chambers of Congress would face political gridlock given a Republican White House, the prospect of stricter federal and local scrutiny on data center construction has increased.

For U.S. stocks, the AI trade had already been under significant pressure ahead of the midterms, amid soaring concerns over the massive amounts of debt being issued by companies to fund their AI infrastructure buildouts. 

"The midterm elections come at the perfect time to rescue the stock market from its bout of AI-driven volatility. Stocks have historically tended to rally after the midterms regardless of the outcome, as fading uncertainty brings relief to markets. A divided government is also welcome news for stock investors, since it lowers the risk of policy changes that could create additional uncertainty," Justin Buell, chief investment officer at Continuity Group, said.

"While a blue wave could spark volatility in certain sectors, such as tech and AI, given growing public opposition to the buildout of data centers, we believe markets can grind higher regardless of the outcome as investors applaud falling uncertainty," he said.

"The stock market is about to enter its seasonal period of strength. November and December tend to be strong months, and that strength could be amplified by falling uncertainty as we move past the midterm elections," Buell added.

Elsewhere, RTX, Northrop Grumman, and Lockheed Martin fell between 2.6% to 7%, amid expectations that Democrats could push back against Trump’s defense spending. Conversely, solar stocks and clean energy names such as Enphase Energy and First Solar climbed 3.7% and 4.6%, respectively, as possibilities of federal support for the industry have now risen.        

Chip stocks fall despite AMD’s strong results

Among other notable movers, chip stocks declined, with the Philadelphia Semiconductor Index shed 3.1%. The losses came despite solid quarterly earnings and guidance from AMD. Shares of the chip designer closed 1% higher, eating into pre-market gains of over 7%. 

Soaring data-center sales led AMD to unveil 2027 growth that was faster than projected. In a call with analysts, top boss Lisa Su said overall revenue was now anticipated to expand by over 80% in 2027. According to data cited by Reuters, analysts had been expecting a forecast for growth of 77%.

Su noted that 80% of overall sales will come from chips designed for data centers, adding that these processors will "drive the majority of our revenue and earnings growth."

However, AMD’s third-quarter profits were hit by a more than $1 billion non-cash charge related to the firm’s strategy of offering warrants to buy future stakes in the business to ChatGPT-maker OpenAI and Instagram-parent Meta Platforms. In return, these companies have committed to buying AMD chips.

CVS slides after disclosing plans to split up $117B business 

Beyond midterm- and earnings-related moves, CVS Health grabbed attention, with shares of the firm dropping 12.5%. 

The company’s quarterly results were overshadowed by its announcement that it would split into two companies, one focused on its retail pharmacies and the other on its Aetna insurance business and pharmacy benefit management (PBM) operations. CVS has a market cap of $116.96 billion.

CVS said the healthcare solutions company would comprise of Aetna, CVS Caremark, CVS Specialty, Oak Street Health and Signify Health, and in the interim would be referred to as CVS Health. The other firm would comprise about 9,000 CVS pharmacies, mail pharmacy, MinuteClinic (including virtual care), and the Health100 technology services business, and would be named CVS Pharmacy.

"Breaking up retail pharmacy from its insurance and PBM businesses poses operational risks by dismantling an integrated ecosystem designed to capture value across healthcare, including steering Aetna members and Caremark customers toward CVS pharmacies. The struggles of Walgreens and Rite Aid underscore the difficult economics facing standalone pharmacy chains without the financial cushion of a corporate umbrella that includes an insurer and PBM," Rajiv Leventhal, senior analyst at Emarketer, said. 

Ambar Warrick and Scott Kanowsky contributed to this article