Democratic Midterm Victory Followed by Broad Stock Rally

Democrats’ victory in the November 3 midterm elections, giving the party control of both chambers of Congress, was followed by a broad early rally in U.S. stocks on Wednesday, November 4. Dow futures were reported up 1,083 points, or 2.1%, while futures tied to the S&P 500 and Nasdaq-100 also rose. The moves were market readings during early trading, not closing figures. The market response shifted during the night and morning. Nasdaq-100 futures fell as much as 2.4% overnight in one account before reversing; another report described futures rising gradually early Wednesday. By later reporting, Dow futures were up 1,083 points, while early trading accounts put the Dow’s advance at more than 1,100 points. Those figures refer to different market instruments and snapshots. The S&P 500 rose 1.6% on Wednesday in one report, while another put its early gain at 1.2%. Investors were described as responding in part to the prospect of divided government, which could make major legislative changes harder to pass. Democrats now control Congress, while President Donald Trump retains veto power. Market strategists said the prospect of political gridlock can limit policy uncertainty, though...