Markets Rally as Democrats Take Congress, Oil Drops Below $95

Washington lost its single-party control of government on Wednesday, triggering a sharp rise in U.S. equities and a steep decline in energy prices.

The Dow Jones Industrial Average climbed 1,501 points, or 2.9%, by 1:11 p.m. Eastern time. The S&P 500 index gained 1.8%, and the Nasdaq composite rose 2.1%. Investors responded to the prospect of Democratic control over both the House of Representatives and the Senate.

Brent crude oil, the international benchmark, fell 8.8% to $94.51 per barrel. This marked the first time the price dropped below $100 in nearly a month. The war with Iran had previously driven prices up, with the most active contract fluctuating between $70 and $120 per barrel since the conflict began.

Equities in the energy sector reflected the drop in crude. ExxonMobil shares declined 5.3%, and ConocoPhillips fell 5.9%. Conversely, renewable energy stocks surged on expectations that a Democratic Congress might support green power initiatives. First Solar jumped 6.4%, and Enphase Energy climbed 6.2%.

Defense contractors saw losses as markets priced in a potential shift in military posture. Lockheed Martin dropped 6.9%, Northrop Grumman fell 4.4%, and General Dynamics declined 2.3%. Vice President JD Vance attributed Republican losses to the war with Iran, which he said caused the spike in oil prices.

Healthcare and discount retail stocks posted strong gains. HCA Healthcare, a major operator of hospitals and ambulatory sites, rose 10.6%. Dollar Tree, which serves lower-income consumers, increased 8.9%. Investors anticipated that Democrats might reverse certain federal cuts made in the summer legislation.

Technology stocks showed mixed results. Nvidia, the leading chipmaker for artificial intelligence, sank 1.4% and weighed on the S&P 500. CoreWeave, a cloud provider for AI chips, dropped 9.1%. Advanced Micro Devices gained 0.5% after posting stronger quarterly profits than expected. Alphabet rose 4.4% after a previous 12% decline related to AI spending concerns.

Trump Media & Technology Group fell 15.9%, while Tesla dropped 2% and SpaceX sank 3.4%. Elon Musk, a major donor to Republicans, faces potential scrutiny from the new congressional leadership. In the bond market, the yield on the 10-year Treasury note eased to 4.91% from 4.95% late Tuesday, suggesting investors perceive less risk of increased deficit spending.