Tuesday night, stock futures dipped as midterm results rolled in.
By Wednesday morning, they had flipped.
By Wednesday afternoon, the Dow Jones Industrial Average had jumped 1,569 points, or about 3%, closing at 53,356. It was the Dow's best day since April 2025 and its biggest single-day gain after a midterm election since 1982, according to CFRA Research.
The S&P 500 climbed 1.58% to 7,688. The Nasdaq rose 1.44% to 25,736.
Democrats won control of both the House and the Senate, and Wall Street liked what that meant for markets. Not every stock got the memo, though.
Why Stocks Took Off
It wasn't really about which party won. It was about the waiting being over.
Markets hate uncertainty, and the decisive results, along with President Trump's statement that he would accept them, removed a big question mark. A measure of expected market volatility, the VIX, fell nearly 20% in a single day.
Investors also warmed to the idea of a divided government. With a Republican president and a Democratic Congress, big new tax and spending packages get much harder to pass. Analysts say that kind of gridlock tends to make the outlook more predictable. Bond yields fell and the dollar weakened as traders bet on less government borrowing.
Capital Economics pointed out that Democrats still lack a filibuster-proof Senate majority, and the president still holds veto power. In other words, neither side gets a free hand.
Oil Plunged Almost 9%
The other big mover was oil. Brent crude fell about 8.7% to $94.62 a barrel, its lowest close since August 31.
The drop accelerated after Vice President JD Vance posted on X that "The reason we lost is the war," referring to the war with Iran. Traders took it as a sign that de-escalation could be coming.
Not everyone agrees. Rapidan Energy Group's Bob McNally said his firm thinks escalation is actually more likely, and warned traders against reading too much into one day.
The Stocks That Crashed
While most of the market rallied, several groups went sharply the other way.
AI stocks: Data centers became a campaign issue in many states, and Democratic wins in places like Texas raised questions about new limits on the AI buildout. Nvidia fell about 3%. CoreWeave dropped nearly 10%, Nebius fell 6.7%, and an ETF tracking AI infrastructure stocks sank 9%.
Elon Musk's companies: Tesla fell about 3.3% and SpaceX about 3.9%. Musk has based his companies in Texas, and the state's election results added uncertainty there.
Defense stocks: As oil fell on hopes of de-escalation, military suppliers dropped. Lockheed Martin fell 7%, Northrop Grumman 4.2%, and General Dynamics 2.4%.
Trump Media: The president's social media company was one of the day's biggest losers, falling about 24.5%.
CVS Health also fell 12.5%, though that was unrelated to the election. The company announced it will split into two.
The Big Winners
Solar stocks, dollar stores, and hospital operators led the rally. HCA Healthcare jumped about 10%. McDonald's rose 6.5% on strong quarterly earnings.
The rally went global, too. Stocks rose 2% in Paris, 2.2% in Shanghai, and 1.8% in London.
What Happens Next?
History is on the market's side. The S&P 500 has risen after each of the last 11 midterm elections going back to 1982, no matter who won.
But one great day doesn't guarantee a great year. The questions over the war with Iran, AI stocks, and how a split government actually works together haven't gone anywhere, and volatility returned to markets the very next day.
As one strategist put it: "Earnings trump elections."
Wednesday was a historic day for the Dow. What comes after it will depend on a lot more than one election night.
This article is for informational purposes only and is not financial advice.