S&P 500, Nasdaq Surge Ahead After Democratic Sweep, Dow Jumps To One-Year High On Lower Oil — AAPL, SNAP, INTC, CRWV, QCOM In Focus

• The S&P 500 ended Wednesday 2% higher, the Nasdaq 100 rose 1%, and the Dow Jones Industrial Average rallied 3%.

• Democrats won majorities in both the House of Representatives and Senate.

• Oil prices dropped about 8%.

U.S. stock indices ended higher on Wednesday, with overall tech and chipmaker stocks staging a recovery as traders bet that a Democratic sweep would lead to a slowdown in AI capex and safeguard falling cash flows.

The S&P 500 ended Wednesday 2% higher, the Nasdaq 100 rose 1%, and the Dow Jones Industrial Average rallied 3% to its highest level in a year. The Russell 2000, which tracks small-cap stocks, added 1.6%.

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The SPDR S&P 500 ETF (SPY) rose 1.7%, and the SPDR Dow Jones Industrial Average ETF (DIA) jumped 3.1%. Meanwhile, the Nasdaq-100 tracking Invesco QQQ Trust (QQQ) ended 1% higher on Wednesday.

Meanwhile, the VanEck Semiconductor ETF (SMH) and the iShares Semiconductor ETF dropped about 3% each on Wednesday amid weakness in Nvidia (NVDA), Micron Tech (MU) and Broadcom (AVGO). The broader Vanguard Information Technology ETF (VGT) added 0.2%.

Retail sentiment on Stocktwits for DIA improved to ‘bullish’ from ‘neutral’, while it remained in ‘bearish’ territory for SPY and QQQ.

US Market Drivers

Traders appeared ready to shrug off political gridlock, betting that the ongoing AI boom will sustain. Analysts noted that divided government may limit additional fiscal stimulus and relieve pressure on Treasury yields, creating a favorable backdrop for equities.

“Gridlock is good,” Jason Pride at Glenmede told Bloomberg. “Markets have historically fared better when no single party can push through legislation on party-line votes. This sort of backdrop has generally been supportive for equities.”

While Democratic gains could complicate data-center development in some states, many investors see little threat to the AI investment picture. Few investors think that a Democratic win could eventually push hyperscalers to slowdown AI spending which inturn would help stop the bleeding in their cash flows.

“The blue wave will have implications for equities, with the biggest impact likely coming from an increase in data center regulation at the state level near-term,” Keith Parker, UBS’s head of global macro equity strategy and US equity strategy research, wrote in a note to clients.