US stocks opened higher on Wednesday after Democrats secured control of both chambers of Congress in the midterm elections, prompting investors to reassess the potential impact of a divided government on economic policy and financial markets.
The Dow Jones Industrial Average rose more than 1,177 points in trading, while the S&P 500 gained 1.13% and the Nasdaq Composite advanced 1.15%.
The gains followed Democratic victories in the Senate and House of Representatives, alongside key gubernatorial races, including Texas.
Investors appeared to view the prospect of legislative gridlock as a factor that could limit major policy changes in Washington.
However, concerns about tighter regulation of artificial intelligence infrastructure weighed on data-centre operators and parts of the technology sector.
Big tech among gainers
Large technology companies were among the early gainers. Amazon shares rose 6.3%, while Meta Platforms and Alphabet traded higher.
Investors also moved into stocks linked to the broader economy. Walmart gained 1.9%, while Bank of America advanced 3.3%.
Health insurers and hospital operators also rose, with Molina Healthcare gaining 6.04%, and Centene adding 6.5%.
The Invesco Solar ETF advanced 9.07%, reflecting expectations that Democratic control of Congress could support continued federal backing for clean-energy development.
The dollar weakened against most major currencies, while yields on long-dated US Treasuries moved lower. WTI crude oil prices declined around 3%.
AI and data-centre stocks face regulatory concerns
Despite the broader market gains, data-centre operators came under pressure as investors assessed the potential implications of Democratic victories in states where opposition to new infrastructure projects has increased.
Texas and Georgia were among the key data-centre markets where Democrats made gains.
In Texas, Gina Hinojosa’s gubernatorial victory added to concerns about potential restrictions on new facilities, as she had pledged an immediate moratorium on data-centre development.
Goldman Sachs economists estimated that Democratic victories at state and local levels could lead to short-term data-centre moratoria affecting about 45% of planned US capacity expansion.
Shares of IREN, Hut 8, Applied Digital and Core Scientific fell between 3.2% and 15.59%.
CoreWeave also traded 5% lower.
Chipmakers were mixed despite AMD’s forecast for faster-than-expected growth in 2027, supported by rising data-centre sales.
AMD shares gained 2%, while Nvidia fell 0.75%.
Marvell Technology, Intel and Micron Technology also moved lower.
SpaceX and Tesla were among the notable laggards, falling 3.55% and 4.5%, respectively.
Investors assess policy and economic outlook
The election results also raised questions about the outlook for defence spending and other sectors affected by federal policy.
Northrop Grumman, RTX and Lockheed Martin fell sharply as President Donald Trump’s proposed $1.5 trillion defence budget could face greater opposition in Congress.
Meanwhile, McDonald’s gained 3.7% after reporting quarterly profit above estimates, while Block jumped 12.88% after raising its full-year gross profit outlook.
Investors are also monitoring the potential implications of the election for inflation and interest rates.
Trump acknowledged that the US-Israeli war on Iran contributed to Republican losses, while market participants assessed whether the political outcome could increase pressure for a resolution to the conflict.
The prospect of lower oil prices could ease some inflation concerns, although uncertainty remains around the policy priorities of a divided government.
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