Markets closed sharply higher on Wednesday following midterm election results that witnessed Democrats taking control of the House, while Republicans managing to hold majority in the Senate, thus delivering a divided Congress. The results gave a boost to investors' confidence and helped lift a cloud of uncertainties weighing on markets. All three major indexes ended in positive territory.
The Dow Jones Industrial Average (DJI) gained 2.1% to close at 26,180.30. The S&P 500 advanced 2.1% to close at 2,813.89. The Nasdaq Composite Index closed at 7,570.75, gaining 2.6%. A total of 8 billion shares were traded on Wednesday, lower than the last 20-session average of 8.64 billion shares. Advancers outnumbered decliners on the NYSE by a 3.27-to-1 ratio. On Nasdaq, a 2.31-to-1 ratio favored advancing issues.
How did the Benchmark Perform?
The Dow gained 545.29 points, marking its best single-day gain since Oct 16. The gains were led by a rally in healthcare and tech stocks. Shares of UnitedHealth Group Incorporated UNH and Apple Inc. AAPL gained 4.2% and 3%, respectively. Apple has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
The S&P 500 advanced 58.43 points, posting its best single-day gain since Oct 25. Each of the 11 major sectors ended the day in positive territory. The gains were led by healthcare, consumer discretionary and tech stocks. The Health Care Select Sector SPDR (XLV) and the Consumer Discretionary Service Select Sector SPDR (XLY) gained 2.9% and 2.7%, respectively. The Technology Select Sector SPDR (XLK) advanced 2.9%.
The tech-heavy Nasdaq added 194.79 points, posting its best single-day gain since Oct 16. Shares of Amazon.com, Inc. AMZN and Netflix, Inc. NFLX gained 6.9% and 5.4%, respectively.
Investors Await Midterm Elections Results
On Wednesday, U.S. midterm election results almost fell in line with forecasts, with the Democrats taking control of the House, while the Republicans maintaining majority in the Senate. This delivered a divided Congress. Investors will now closely watch President Trump as he seeks to deal with a divided Congress over the rest of his current term.
Markets have been reeling under pressure for quite some time and were closely awaiting the results of the midterm elections. Investors have been expecting that Trump's business-friendly policies would continue, while Democrats getting control over the House would help to provide a check on Trump's disruptive trade and market actions. The results lifted investor sentiment and helped in lifting a cloud of uncertainties weighing on markets.
On Wednesday, the S&P 500's biggest boost came from tech, consumer discretionary and healthcare stocks. Investors are also expecting that Trump will be working closely with Democrats on his infrastructure plan. This saw a rally in industrial stocks. Tech stocks benefited on expectations that a split Congress will keep the President from acting against industry giants like Amazon, which have been responsible for the broader tech rally.
Wednesday's rally, marked the biggest gains for both the Dow and the S&P 500 since the day after the 1982 midterm election results, when the indexes gained 4.3% and 3.9%, respectively.
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