NEW YORK (AP) — U.S. stocks soared, oil prices decreased and Elon Musk's companies struggled Wednesday after President Donald Trump's party lost its sole control of Washington in the midterm elections.
Meanwhile, green energy companies rose, healthcare stocks rallied and military suppliers and the artificial intelligence industry felt pressure.
Stocks generally do well in the months following any midterm U.S. election, regardless of who wins, and the S&P 500 jumped 1.6% for its best day in three months. The Dow Jones Industrial Average rallied 1,569 points, or 3%, and the Nasdaq composite climbed 1.4%.
Still, Wall Street may have gotten a preferred political scenario as Democrats are set to take control of both the Senate and the House of Representatives. Wall Street generally prefers split control of Washington because it lessens the risk of transformative changes to the economy.
Oil prices tumbled, and green energy companies rose
The possibility of pressure to pull back on the Iran War sent the price for a barrel of Brent crude oil plunging 8.7% to $94.62, its lowest level in two months. That in turn hurt stocks of big oil companies, which had been rallying for much of the year. ExxonMobil fell 4.6% and ConocoPhillips dropped 5.2%.
Falling oil prices usually hurt stocks of renewable-energy companies because they can lessen the incentive to switch to other energy sources. But Democratic control of Congress could light the way for companies in the solar and wind industries.
First Solar rose 4.6% and Enphase Energy climbed 3.7%.
Tesla Sank
Investors see risks ahead for the artificial intelligence industry and businesses owned by Elon Musk, including Tesla and SpaceX, which fell 3.3% and 3.8%, respectively.
AI companies in general are under pressure
Trump has been a big backer of the AI industry, and Democratic victories could mean more regulation or restrictions. Concerns have grown across political parties about AI in general.
Investors see Democratic wins in Texas in particular as possibly slowing the further build out of AI data centers. AI-related stocks came into Election Day already under pressure because of worries their prices had shot too high.
Nvidia, the chip company that quickly became the poster child of the frenzy around AI-related stocks, sank 3.2% and was the heaviest weight on the S&P 500. CoreWeave, a company that rents out access to AI chips to customers over the cloud, dropped 9.9%.
Companies that have been spending heavily on AI chips held up better. Alphabet rose 3.2%, for example. The parent company of Google had tumbled to its worst loss ever last Thursday on worries that it was spending too much on AI investments.
Military suppliers felt pressure
A Democratic-led Congress could push Trump to pull back on the war with Iran.
That hurt stocks of companies that make weapons and other equipment for the U.S. military, including drops of 6.9% for Lockheed Martin, 4.5% for Northrop Grumman and 2.6% for General Dynamics.
Healthcare stocks also rallied
A Democratic-led Congress could try to reverse some of the cuts to federal healthcare and food assistance that Republicans approved in their "One Big Beautiful Bill Act."
That helped stocks climb across the healthcare industry, including a 10.3% rise for HCA Healthcare, which runs hospitals and ambulatory sites.
Bond yields tumbled
In the bond market, Treasury yields sank as oil prices dropped and took pressure off inflation. The move could also be a signal that investors see less risk of Washington piling more debt onto its already big mountain with the coming end to one-party control.
Treasury yields had climbed through the summer and reached their highest levels in decades because of worries about the U.S. government's big debt, along with high inflation and other concerns. A Congress controlled by Democrats could provide a check against more spending and cuts to taxes that would widen Washington's deficit.
The yield on the 10-year Treasury dropped to 4.88% from 4.95% late Tuesday.
Much remains impossible to predict
Strategists along Wall Street had been urging investors not to get swept up in the election because it may not matter much for the broad market in the long term. Prices for stocks depend more on where profits for companies and interest rates are heading than on who controls what in Washington.
Also, Trump still retains executive authority over key areas such as defense, foreign policy and, in some instances, trade.
All told, the S&P 500 rose 119.70 points to 7,688.62. The Dow Jones Industrial Average rallied 1,569.40 to 53,356.12 and the Nasdaq composite climbed 364.50 to 25,736.51.
AP Writer Elaine Lai contributed to this report from Hong Kong.
