Stocks are soaring, precious metals are surging, the dollar is dipping, and interest rates are sliding in early post-election trading. Crude oil is down, while Bitcoin is flat.
In a seismic midterm election shift, Democrats took control of the House, the Senate, and a handful of governorships around the US. While a few races remain too close to call, the new Senate’s margin currently sits at 54-44. The new House breakdown is 228-139.
Gold (Yellow), S&P 500 (Green), Treasury Bonds (Blue), Crude Oil (Orange) – Futures, 1-Day % Change
Equity markets initially sold off, before reversing course and rallying sharply. Gold soared more than $115 an ounce, while silver jumped almost 5%. Crude oil fell further, with WTI futures dipping below $95 a barrel. Investors appear to be betting that escalation is now less likely in the Middle East, while gridlock in Washington is probable because President Trump has pledged to veto bills coming out of Congress.
On a sector-specific level, tech investors may have to dial back their data center construction expectations. The incoming governors of Texas, Georgia, Ohio, and Michigan all pledged to pursue less-AI-friendly policies. Voters in several local jurisdictions also backed proposals to curb or halt data center projects. That caused neocloud and AI infrastructure stocks like CoreWeave Inc. (CRWV) and Galaxy Digital Inc. (GLXY) to slide in early trading.
Elsewhere in markets, defense stocks slipped on the assumption defense spending will increase by a smaller amount under a Democratic Congress. Lockheed Martin Corp. (LMT) fell 4% in early trading, while General Dynamics Corp. (GD) slipped 2%. Renewable energy stocks rose amid hopes for more-friendly government policy. The Invesco Solar ETF (TAN), for instance, jumped more than 5%.
One thing to keep in mind amid these short-term gyrations: Markets tend to rally for a while after elections regardless of who wins and which party they represent. The reason? Uncertainty is eliminated and investors can refocus on underlying corporate and economic fundamentals. See my Chart of the Day column for more!
