US stocks surge after midterms; tech and health care jump

NEW YORK — Stock and bond prices are climbing Wednesday after the U.S. midterm elections generally went the way investors expected they would. Big-name technology and consumer companies are making some of the largest gains.

Democrats won control of the House of Representatives while Republicans kept a majority in the Senate, as most polls had suggested. It's not clear how the divided Congress will work with Republican President Donald Trump, but if the possibilities for compromise and big agenda items seem limited, Wall Street is fine with that because it means politics is that much less likely to crowd out the performance of the strong U.S. economy.

"The market likes when what it expects to happen happens," said JJ Kinahan, chief markets strategist for TD Ameritrade. "We haven't had that happen in a little while, when you think about major events like Brexit or the presidential election."

The S&P 500 index gained 46 points, or 1.7 percent, to 2,802 as of 2:15 p.m. Eastern time. The S&P 500 is on track for its highest close in three weeks.

The Dow Jones Industrial Average rose 422 points, or 1.7 percent, to 26,057. The Nasdaq composite climbed 157 points, or 2.2 percent, to 7,533. The Russell 2000 index of smaller-company stocks added 16 points, or 1 percent, to 1,572. Almost three-fourths of the stocks on the New York Stock Exchange traded higher.

Historically markets have performed well after midterm elections and with split control of Congress.

High-growth stocks were pummeled during the market's drop last month. Quincy Krosby, chief market strategist at Prudential Financial, said it will be worth watching to see if investors are willing to buy those stocks again or if they continue to prefer slower-growing, more "defensive" companies like utilities and household goods makers.

Technology and consumer-focused stocks headed higher Wednesday. Amazon jumped 5.6 percent to $1,735 while Microsoft rose 3.7 percent to $111.70. Google's parent company, Alphabet, picked up 2.7 percent to $1,098.

Steady "defensive" stocks lagged the rest of the stock market. Those companies, which include utilities and household goods makers, tend to do well when stocks are in turmoil, but they're less appealing when investors are betting on economic growth.

Industrial companies rose, but not as much as the rest of the market. While some investors hope that Trump and Congressional leadership will pass an infrastructure stimulus bill, they've had those hopes dashed more than once since he took office.

It's not clear how the elections will affect the Trump policy Wall Street might be most concerned about: the trade dispute with China. Trump has imposed taxes of up to 25 percent on $250 billion of Chinese imports and threatened additional tariffs on top of those. Beijing has responded with tariffs on $110 billion of American goods.

A primary concern in Asia is the potential for trade tensions to hobble growth for export-reliant economies.

Banks, meanwhile, didn't rise as much other stocks as bond yields slipped. Republicans had discussed a new round of tax cuts if they maintained full control over Congress, which would have expanded the government's deficits further and required it to issue more debt. Government bond yields spiked overnight after a batch of strong early results for some GOP candidates, but then headed lower as Democrats' fortunes improved, making a new tax cut package unlikely.

Democrats' victory in the House also means that Rep. Maxine Waters will likely become chairwoman of the House Financial Services Committee, which oversees the nation's banking system and its regulators. Waters has called for more regulation of banks, and has been vocal about Trump political appointees moving to roll back regulations on banks and other financial services companies.

The yield on the 10-year Treasury note went as high as 3.25 percent Tuesday night from 3.21 earlier in the day. On Wednesday it dipped to 3.19 percent.

The U.S. dollar also weakened. The ICE US dollar index fell 0.2 percent. The U.S. currency fell to 113.36 yen from 113.40 yen, and the euro climbed to $1.1451 from $1.1413.

Major indexes in Europe climbed. The French CAC 40 jumped 1.2 percent, while Britain's FTSE 100 gained 1.1 percent. The DAX in Germany rose 0.8 percent.

The U.S. markets swooned in October, knocking the S&P 500 down nearly 7 percent, as investors worried about rising interest rates and the U.S.-China trade dispute. The S&P 500 is up about 3 percent so far in November.

October is historically a rough month for stocks, though markets usually rise after midterm elections regardless of how the political landscape may change because Wall Street is glad to have more certainty.

Democrats' win in the House means Republicans won't be able to take another shot at repealing the 2010 Affordable Care Act, which extended health insurance coverage to millions of Americans. Voters in Idaho and Nebraska all voted to expand Medicaid, and the winning gubernatorial candidates in Maine and Kansas also favor expanding Medicaid benefits. Voting on a Medicaid expansion proposition in Utah was too close to call.

Health insurers, hospital operators and Medicaid program operators all jumped. UnitedHealth gained 4.3 percent to $214.86. HCA added 4.7 percent to $141.62. Molina, a provider of Medicaid-related services, surged 9.1 percent to $135.49.

Oil prices continued to fall. U.S. crude lost 0.9 percent to $61.64, and Brent crude, the standard for international oil prices, dipped 0.2 percent to $71.97 a barrel in London.

Gold rose 0.2 percent to $1,228.70 an ounce. Silver picked up 0.5 percent to $14.57 an ounce. Copper added 0.8 percent to $2.75 a pound.

In Asia, Japan's benchmark Nikkei 225 fell 0.3 percent while South Korea's Kospi slipped 0.5 percent. But Hong Kong's Hang Seng edged 0.1 percent higher.

The Federal Reserve is also meeting Wednesday and Thursday. It's not expected to raise interest rates this month, but investors believe it will do so in December.

____

AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP

Pan Pylas in London and Yuri Kageyama in Tokyo contributed to this report.

Must Read

Home Depot rides housing boom to record sales, profit

Aug 16, 2016

Home Depot posted record sales and earnings during its second quarter and raised its profit expectations for the year as housing market continues to warm up

Conventional tax proposals in an unconventional US campaign

Aug 17, 2016

In this unconventional campaign season, Donald Trump and Hillary Clinton have produced two conventional tax plans that mostly track their parties' long-standing views

US stocks dip as phone stocks fall; earnings hit retailers

Aug 17, 2016

US stocks fall, with the biggest losses again going to phone and utility companies

Search

Obserworld delivers the most accurate and up-to-date world news for the global audience with a thorough research and in-depth interviews. Discover the world through Obserworld.

Contact us: sales[at]obserworld.com