US stocks surged on Wednesday as investors reacted to the 2026 midterm election results, which saw Democrats take control of both chambers of Congress from President Donald Trump’s Republican Party.
The S&P 500 rose 1.8%, putting it on course for its strongest daily performance in three months. The Dow Jones Industrial Average gained 1,112 points, representing a 2.1% increase, while the Nasdaq Composite climbed 2.4% as of 10 a.m. Eastern time.
Shares of renewable energy companies led some of the gains, while stocks linked to Trump Media, Elon Musk’s businesses and parts of the artificial intelligence industry came under pressure.
Historically, US stocks have tended to perform well in the months following midterm elections, regardless of which political party makes gains. However, market strategists have cautioned against assuming that election results alone will determine the market’s long-term direction.
Company earnings, interest rates and the broader economic outlook remain important factors influencing share prices.
Brian Jacobsen, chief economic strategist at Annex Wealth Management, summed up the relationship between corporate performance and politics with the phrase: “Earnings trump elections.”
Democrats’ congressional victories influence market expectations
Democrats’ victories in the House of Representatives and Senate could create a political counterbalance to Trump’s administration.
Wall Street often views divided control of Washington as a way to reduce the likelihood of major policy changes that could affect businesses and financial markets.
However, the election outcome does not remove uncertainty over the administration’s economic policies. Trump retains executive authority over areas including defence, foreign policy and certain trade decisions.
Carsten Brzeski, global head of macro at ING Bank, outlined two possible scenarios for the president’s response to the election results.
One concern is that Trump could renew disputes over tariffs and military spending by NATO allies. A more optimistic possibility, Brzeski said, is that the president could adopt a less disruptive approach and concentrate on diplomatic efforts to end major conflicts.
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Trump Media and Tesla shares decline
Trump Media & Technology Group was among the notable decliners after the election, with its shares falling 9.5%.
The company, whose main platform is Truth Social, had already lost 55.1% of its market value since the beginning of the year before Wednesday’s trading session.
Its stock has also fallen substantially from a peak of about $175 recorded several years ago, trading closer to $5 in the period covered by the report.
Companies associated with billionaire Elon Musk also experienced losses. Tesla shares dropped 3.6%, while SpaceX fell 3%.
Musk, who previously served as a senior adviser to Trump and made substantial political donations to Republicans, could face increased scrutiny from a Congress controlled by Democrats.
AI stocks face pressure over possible regulation
Artificial intelligence companies also came under pressure as investors considered whether Democratic control of Congress could lead to tighter regulation of the industry.
Concerns about the rapid expansion of AI technology have emerged across political parties, while the future development of large data centres has become a subject of debate.
Nvidia, a major supplier of chips used in artificial intelligence systems, fell 0.5% after declining as much as 2.8% earlier in the session.
CoreWeave, which provides access to computing infrastructure and AI chips through cloud services, lost 6.8%.
Advanced Micro Devices performed better, rising 3.4% after reporting quarterly profits that exceeded analysts’ expectations.
Solar and wind energy companies record gains
Renewable energy stocks were among the biggest winners during Wednesday’s trading session.
First Solar gained 11.1%, while Enphase Energy climbed 11.6%.
Investors appeared to be assessing the possibility that a Democratic-controlled Congress could create a more favourable policy environment for solar and wind energy businesses.
US Treasury yields decline
The bond market also recorded movements as investors assessed the possible implications of the election results for government borrowing and spending.
The yield on the 10-year US Treasury note fell to 4.92% from 4.95% late on Tuesday.
Treasury yields had risen during the preceding months amid concerns about government debt, inflation and the possibility of additional borrowing.
A Congress controlled by Democrats could provide a check on some spending and tax proposals, although the eventual effect on the federal deficit remains uncertain.
Global markets rise as oil prices ease
Stock markets in several major economies also advanced on Wednesday.
France’s CAC 40 rose 2.2%, Shanghai’s main market gained 2.2%, while London’s FTSE 100 increased 1.8%.
Japan’s Nikkei 225 moved in the opposite direction, falling 1.4%.
Lower oil prices provided additional support to global equities. Brent crude, the international benchmark, declined 2.9% to $100.63 per barrel amid uncertainty about how the war involving Iran could affect global energy supplies.
Brent prices have fluctuated between approximately $70 and $120 per barrel since shortly before the conflict began, reflecting concerns about possible disruptions to oil production and transportation.