US stock markets rallied following the November 3 midterm elections after Democrats secured control of both the House and Senate. The S&P 500 rose 1.2%, the Nasdaq gained 1.1%, and the Dow Jones Industrial Average surged more than 1,100 points. Market capitalization increased by over $1 trillion at the opening bell.
The market recovery followed Donald Trump's acceptance of the election results, which eased investor concerns regarding potential political disputes. Investors anticipate a period of political gridlock, as the divided government between the Democratic-controlled Congress and presidential veto power limits major legislative changes to taxes and spending.
The benchmark 10-year Treasury yield declined to approximately 4.92%, potentially supporting stock valuations by lowering borrowing costs. Solar stocks experienced significant gains, with First Solar rising 15.1% and Enphase Energy increasing 12.1%, as investors expect Democratic support for renewable energy and healthcare funding.
Corporate earnings reports provided additional momentum for the market. AMD shares rallied following a positive growth forecast for 2027 driven by AI data-center demand, while Arista Networks reported strong revenue growth. Conversely, defense contractors and AI data-center operators faced selling pressure due to potential regulatory scrutiny.
Historical data from JPMorgan Asset Management indicates that the S&P 500 has gained an average of roughly 15% in the 12 months following midterm elections since 1950. Since 1928, stocks have averaged gains of approximately 14% in the calendar year after midterms and 8% in the subsequent presidential election year.
