Tech, healthcare stocks boost Wall Street after midterm results
U.S. stocks rose strongly on Wednesday as investors piled into technology and healthcare sectors after midterm elections led to a divided Congress as expected and fueled bets that tighter regulations would be harder to push through.
Democrats won control of the House of Representatives on Tuesday, while President Donald Trump’s Republicans expanded their majority in the Senate, pointing to a political gridlock in Washington.
The technology and healthcare sectors rose more than 2 percent each as fears of stricter regulations curbing on their growth eased.
Health insurers Humana Inc, Anthem Inc and UnitedHealth Group Inc jumped to record highs as voters in three states approved expanding Medicaid programs for low-income people.
The communication services sector rose 1.5 percent, led by gains in Facebook Inc, Netflix Inc and Alphabet Inc.
While a divided Congress will hamper Trump’s political and economic agenda, few expect a reversal of corporate tax cuts and deregulation measures that have already been enacted, allowing investors to buy back into a market attempting a recovery from its worst month in seven years in October.
“For today, the market is breathing a sigh of relief because that point of uncertainty is off the table,” said Anthony Chan, chief economist at J.P. Morgan in New York.
“They are very excited that there is also opportunity to negotiate trade (with China).”
At 11:37 a.m. EDT the Dow Jones Industrial Average was up 277.15 points, or 1.08 percent, at 25,912.16, the S&P 500 was up 35.68 points, or 1.29 percent, at 2,791.13 and the Nasdaq Composite was up 134.70 points, or 1.83 percent, at 7,510.67.
Following a steep selloff in October, the S&P 500 remains down roughly 5 percent from its record high, as uncertainty about the election and fears about rising interest rates and trade wars roil stocks globally.
The Federal Reserve starts its two-day monetary policy meeting on Wednesday, but is not expected to raise rates until December. But financial stocks fell 0.1 percent and banks fell as the Treasury yields slipped.
The energy index jumped 0.8 percent as oil prices rose on a report that Russia and Saudi Arabia are discussing whether to cut crude output next year.
Anadarko Petroleum Corp surged 6 percent and Noble Energy Inc jumped 5.4 percent after Colorado voters a rejected a tougher rule on oil and gas drilling, which spurred shares of companies operating in the state.
DaVita Inc jumped 11.2 percent after California rejected a proposal to limit the rates dialysis clinics can charge commercially insured patients.
Among the laggards were luxury handbag maker Michael Kors Holding Ltd and beauty products maker Coty Inc, which tumbled 13.5 percent and 19.5 percent, respectively, after both missed quarterly revenue estimates.
Advancing issues outnumbered decliners by a 2.51-to-1 ratio on the NYSE and by a 1.76-to-1 ratio on the Nasdaq.
The S&P index recorded 28 new 52-week highs and three new lows, while the Nasdaq recorded 53 new highs and 46 new lows.