Markets rallied on Wednesday as investors digested the blue wave of Democratic victories.
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US stocks rallied as investors took in the Democratic sweep in Tuesday’s midterms.
Data centers were a flashpoint for markets, as investors see Democrats as a potential obstacle to the AI buildout.
Treasury yields dipped on the expectation that inflation pressures could ease if Democrats push to end the Iran war.
The ” Blunami ” is washing over markets.
US stocks rallied at the open as investors digested the stunning streak of Democrat victories in Tuesday’s midterm elections. The major indexes intially dropped overnight before reversing course to surge Wednesday morning, with the Dow up by more than 1,200 points.
Here’s where US indexes stood shortly after the 9:30 a.m. ET opening bell:
S&P 500 : 7,697.39, up 1.7%
Dow Jones Industrial Average : 52,883.92, up 2.12% (+1,097 points)
Nasdaq 100 : 28,665.05, up 1.72%
The reaction is twofold: 1), investors are relieved that a major overhang has been removed for the market, and 2), they’re looking ahead to a post-midterm rally, with stocks historically muddling through as they near the election before rallying in the months after.
A 2% surge in the Nasdaq 100 also may also signal that investors don’t see the AI trade suffering a major setback as Democrats get ready to wield power in Congress next year. Without a veto-proof majority to reshape the rules around things like data-center development, it’s likely that debates around the AI buildout will continue to take place at the state and local level.
Since 1970, the S&P 500 has gained an average 14% in the six months following a midterm election, compared to the average 6% gain in non-midterm years, according to an analysis from BlackRock.
“The midterm elections come at the perfect time to rescue the stock market from its bout of AI-driven volatility. Stocks have historically tended to rally after the midterms regardless of the outcome,” Justin Buell, the chief investment officer of Continuity Group, wrote in a note.
“There’s that sigh of relief that comes with knowing what the results are and being able to move forward and contemplating a world where some of the more drastic of the rules and regulations that have been put in place over the last couple of years may be moderated,” Art Hogan, the chief market strategist at B. Riley Wealth Management, told Business Insider.
Here’s the rundown of the market’s biggest winners and losers:
The winners
1. Healthcare stocks
Multiracial medical workers discussing while walking on elevated walkway seen through glass
Klaus Vedfelt/Getty Images
Investors are feeling more bullish on healthcare with democrats in charge of Congress. Markets are pricing in a higher probability that democratic lawmakers repeal some of the cutbacks to programs like Medicaid and Medicare, Hogan said.
Healthcare stocks have also outperformed in the months leading up to the midterms, he added, pointing to the secular growth potential analysts have been eyeing in the sector.
Here were some of the sector’s most notable moves:
Stock Ticker Move
Molina Healthcare MOH +6%
HCA Healthcare HCA +6%
Centene CNC +4%
2. Renewable energy stocks
Investors are also bullish on the renewable energy theme as a result of the Democratic sweep.
Patrick Pleul/picture alliance via Getty Images
Renewable energy stocks also gained, attesting to expectations that a Democratic Congress will push policies that could give the sector a boost.
“They’re catching a bid with the concept that there may be more sponsorship of that sector,” Hogan added.
Here were some of the sector’s most notable moves:
ETF Ticker Move
Invesco Solar ETF TAN +6%
iShares Global Clean Energy ETF ICLN +4%
First Trust NASDAQ Clean Edge Green Energy Idx Fd QCLN +1%
3. US Treasurys
Investors are also directing their attention to one major perk of the Democratic sweep: the idea that lawmakers could rein in the US-Iran war, potentially cooling oil prices and the inflationary impacts of the conflict.
The war has been a stumbling block for markets for most of 2026. Should Democrats push for an end to the war, and if oil flows rise back to pre-war levels, inflationary pressures could ease throughout the economy and lessen the need for the Fed to hike rates.
Investors are also cheering the idea that a possible resolution to the war will remove a big pressure on the fiscal situation, as fears about debt and deficits have forced yields higher all year.
Treasury yields declined throughout the maturity curve.
Here were some of the most notable moves:
US Treasury Level Move (in basis points)
2-year 4.59% -1
10-year 4.92% -2
30-year 5.30% -1
4. Gold and bitcoin
Gold and bitcoin are also emerging as winners after the 2026 midterms.
Stefano RELLANDINI / AFP via Getty Images
The same logic is boosting gold and bitcoin. As the market pares rate-hike expectations, it makes US Treasurys and the dollar less competitive against non-yielding assets like gold and crypto, which encourages flows into those assets, Ranim Turfa, the head of research and market analysis at Tickmill’s Middle East and North Africa arm, wrote in a note.
Gold rose nearly 3% to $4,054 an ounce by Wednesday morning.
Bitcoin ticked higher 1% to trade around $78,304.
The losers
1. The data-center trade
Investors fear that the Democratic sweep could impact the data center boom.
Jon Cherry/Getty Images
Investors see the Democratic sweep as a possible obstacle to the continued AI infrastructure buildout. Democratic lawmakers could push for more regulation and oversight on data center construction , slowing down the AI boom at a time when infrastructure is still the major focus among the market’s hyperscalers.
In Texas , the state that’s expected to host around 30% of all data center capacity in the US, Democrat Gina Hinojosa’s victory in the race for governor is being viewed as bearish for infrastructure developers and neocloud companies in the state.
SpaceX, which is a major AI spender, dropped 7% after the election results. Tesla, which is also headquartered in the Lone Star state, dropped 4%.
Neoclouds were among the biggest losers, with the Roundhill Neocloud ETF sliding 5%. CoreWeave fell 7%. IREN Limited and Nebius dropped 10% and 5%, respectively.
AI infrastructure, chips, data center stocks are among the market’s “most vulnerable” areas with a Democratic sweep, Ioan Jauregui, an analyst at ActivTrades, wrote in a note.
“Hinojosa is a known anti-data center politician and negative on the AI buildout which makes worries around the future of the datacenter buildout in Texas a real issue for tech investors,” Dan Ives, a longtime tech analyst and a senior managing director at Yorkville Ives, wrote in a note to clients.
“Big Tech will need to hit the ‘slow down’ button,” he added.
“While a blue wave could spark volatility in certain sectors, such as tech and AI, given growing public opposition to the buildout of data centers, we believe markets can grind higher regardless of the outcome as investors applaud falling uncertainty,” Justin Buell, the CIO of Continuity Group, wrote in a note.
Here were some of the sector’s most notable moves:
Stock Ticker Move
SpaceX SPCX -7%
Tesla TSLA -4%
Intel INTC -2%
Micron MU -2%
Nvidia NVDA -1%
Broadcom AVGO -1%
2. Defense stocks
Defense stocks are down on the idea that Democratic lawmakers could push the Iran war to a soon-to-come resolution.
Tom Nicholson/Getty Images
The idea that Democrats could push the US and Iran toward a soon-to-come resolution has spoiled the year-long rally in defense stocks .
Here were some of the sector’s most notable moves:
Stock Ticker Move
Lockheed Martin Corp LMT -3%
Northrup Grumman Corp NOC -3%
RTX Corp RTX -2%
3. Trump Media, TRUMP coin, other cryptos
Investments associated with Trump’s likeness have taken a beating on the midterm results.
Jonathan Raa/NurPhoto via Getty Images
Investments tied to Trump and his family’s interests were battered by the election results. Trump Media & Technology Group , one prominent piece of the Trump Trade, cratered 10% Wednesday morning.
TRUMP coin , Trump’s cryptocurrency, dropped 16% alongside other tokens associated with Trump’s family.
Cryptocurrency Move
TRUMP -16%
MELANIA -19%
BARRON -4%
These investments are “hyperspeculative” and don’t trade on clear fundamentals, B. Riley’s Hogan said.
“I don’t know that there’s any fundamental reasons for them to even exist. And since they do, not surprising to see the Democratic sweep of Congress would certainly cast a harsher light on the potential as investment vehicles,” he said.
Read the original article on Business Insider
