Post-midterm rally: Dow surges ~1,300 points for best day since April as defense stocks plunge on divided government
What happened
U.S. stocks soared Wednesday as Wall Street digested the Democrats' emphatic midterm sweep. The Dow jumped ~1,307 points (+2.5-2.6%), set for its best day since April; the S&P 500 rose ~1.5-1.6% and the Nasdaq ~1.7%. Futures had fallen sharply overnight as results came in but reversed course as investors embraced the decisiveness of the outcome and the prospect of legislative gridlock curbing spending. Under the surface it was a bifurcated rally: Amazon (+7%), Apple and Microsoft (+6%+) and Alphabet (+4%) led Dow gainers, while defense stocks cratered — Lockheed Martin gapped down nearly 6% — and Tesla/SpaceX fell 3-4%. The 10-year Treasury yield dropped to 4.91% (two-month low), the dollar slid 0.5% to a one-month low, gold jumped 3% to ~$4,060/oz, and bitcoin rose to $80,300. Brent crude fell to ~$100.84 and WTI to ~$91.95 (down 4.5%, lowest in nearly a month) as investors bet a Democratic Congress would challenge tariffs and push to end the Iran war, anticipating resolution of the Hormuz blockage. The VIX sank 16%. ADP payrolls also beat: +86K private jobs in October vs ~70K expected.
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Who’s affected
- {'exposure': 'defense stocks (Lockheed Martin, etc.) fell sharply on fears the Democratic Congress will scrutinize defense spending and the Iran war', 'name': 'Defense contractors (LMT)'}
- {'exposure': 'fell ~4% in premarket as Musk-backed Republicans lost and the Tesla/SpaceX merger faces heightened antitrust scrutiny', 'name': 'Tesla (TSLA), SpaceX'}
- {'exposure': "AMZN +7%, AAPL/MSFT +6%+, GOOGL +4% led Dow gainers; NVDA/AVGO -2%, Micron -6% on fears Democrats' data-center crackdown slows AI buildout", 'name': 'Big tech / AI names'}
- {'exposure': "fell as investors bet Democrats' House majority would challenge tariffs and push to end the Iran war", 'name': 'Oil (Brent/WTI)'}
- {'exposure': 'homebuilding, healthcare, apparel rotated in as investors favored non-tech areas', 'name': 'Cyclical non-tech sectors'}
- {'exposure': 'Trump Media -10% to record closing low, SpaceX -2-4% as Musk spent ~$500m backing losing Republicans', 'name': 'Trump Media (DJT)'}