(Nov 5) : A Democratic sweep of Congress that highlighted opposition of the Iran war extended this week’s plunge in oil prices, helping drive stocks and bonds to big post-election gains.

The S&P 500 rose 1.6%, the most since August. Microsoft Corp., Amazon.com Inc. and Apple Inc. each climbed over 5%. Treasury yields fell across the curve. The dollar had its worst day in two months. Bitcoin topped US$80,000. A nearly 10% tumble in Brent crude sent its price below US$100.

Investors appeared willing to look past the political upheaval, betting the main drivers of US growth, from consumer spending to the artificial-intelligence boom, would remain intact. Political gridlock could curb further fiscal expansion and ease pressure on bonds, offering support for stocks.

“Gridlock is good,” said Jason Pride at Glenmede. “Markets have historically fared better when no single party can push through legislation on party-line votes. This sort of backdrop has generally been supportive for equities.”

While Democratic gains could complicate data-center development in some states, many investors see little immediate threat to the AI investment picture.

Greater congressional oversight will not necessarily derail the AI investment cycle as underlying demand is still solid, according to Ulrike Hoffmann-Burchardi at UBS Global Wealth Management.

“Yes, potential worries over AI regulation are high, but the reality is markets hate uncertainty and now with the election out of the way, we are seeing buyers step in across the board,” said Ryan Detrick at Carson Group.

US stocks are set for gains into year-end as the election removes a source of uncertainty, earnings remain strong and lackluster investor positioning leaves room for renewed buying, noted Citadel Securities’ Scott Rubner.

Since 1946, stocks have been higher one year after every midterm vote, including all four instances when both the House and Senate flipped to the party opposing the president, said Keith Lerner at Truist Advisory Services Inc.

“That supports our base case of giving the bull market the benefit of the doubt, but earnings, the economy, interest rates, valuations, and market trends remain more important to our view,” he added.

uploaded by Isabelle Francis