NEW YORK — Stocks rallied Wednesday as investors were relieved to see that the U.S. midterm elections went largely as they expected they would. Big-name technology and consumer and health care companies soared as the S&P 500 index closed at its highest level in four weeks.
Democrats won control of the House of Representatives while Republicans kept a majority in the Senate. It’s not clear how the divided Congress will work with President Trump, but if the possibilities for compromise and big agenda items seem limited, Wall Street is fine with that because it means politics is that much less likely to crowd out the performance of the strong U.S. economy.
“The market likes when what it expects to happen happens,” said JJ Kinahan, chief markets strategist for TD Ameritrade. “We haven’t had that happen in a little while, when you think about major events like Brexit or the presidential election.”
The S&P 500 index climbed 58.44 points, or 2.1 percent, to 2,813.89. The index has risen six out of the last seven days to recover most of the losses it suffered in October.
The Dow Jones Industrial Average rose 545.29 points, or 2.1 percent, to 26,180.30. The Nasdaq composite climbed 194.79 points, or 2.6 percent, to 7,570.75. The Russell 2000 index of smaller-company stocks added 26.06 points, or 1.7 percent, to 1,582.16. Three-fourths of the stocks on the New York Stock Exchange traded higher.
Historically markets have performed well after midterm elections and with split control of Congress.
Stocks are off to a strong start in November, and the S&P 500 is up 3.8 percent so far this month. That follows a swoon in October that knocked the S&P 500 down nearly 7 percent as investors worried about rising interest rates and the U.S.-China trade dispute.
On Wednesday investors bet on growth. Amazon jumped 6.9 percent to $1,755.49 and Microsoft gained 3.9 percent to $111.96, while Google’s parent company, Alphabet, picked up 3.6 percent to $1,108.24.
Steady, “defensive” stocks lagged the rest of the stock market. Those companies, which include utilities and household goods makers, tend to do well when stocks are in turmoil, but they’re less appealing when investors are betting on economic growth.
It’s not clear how the elections will affect the Trump policy Wall Street might be most concerned about: the trade dispute with China. Trump has imposed taxes of up to 25 percent on $250 billion of Chinese imports and threatened additional tariffs on top of those. Beijing has responded with tariffs on $110 billion of American goods.
A primary concern in Asia is the potential for trade tensions to hobble growth for export-reliant economies.
Economists at S&P Global, Oxford Economics and the Bank of America all agreed that government gridlock will likely result from the Democrats winning control of the House. But they don’t think a stalemate will automatically hinder economic growth.
It’s more likely that government will play less of a role in spurring economic growth in 2019 and 2020. As a result, the health of the global economy, interest rates set by the Federal Reserve and spending by U.S. consumers and companies will have a bigger impact on determining the pace of growth.
Democrats’ win in the House means Republicans won’t be able to take another shot at repealing the 2010 Affordable Care Act, which extended health insurance coverage to millions of Americans. Voters in Idaho and Nebraska voted to expand Medicaid, and the winning gubernatorial candidates in Maine and Kansas also favor expanding Medicaid benefits. Voting on a Medicaid expansion proposition in Utah was too close to call.
Health insurers, hospital operators and Medicaid program operators all jumped. UnitedHealth gained 4.2 percent to $274.63 and hospital company HCA added 4.7 percent to $141.65. Molina, a provider of Medicaid-related services, surged 10.5 percent to $137.32.
Marijuana stocks jumped after Michigan voted to legalize recreational marijuana and Utah and Missouri voters approved medical marijuana measures. The stocks rose even further after the resignation of Attorney General Jeff Sessions, who promoted more aggressive enforcement of those laws. Tilray vaulted 30.6 percent to $139.60 and Canopy Growth rose 8.2 percent to $46.07.
Oil prices continued to fall. U.S. crude lost 0.9 percent to $61.67, and Brent crude, the standard for international oil prices, dipped 0.1 percent to $72.07 a barrel in London.
Wholesale gasoline lost 2.8 percent to $1.65 a gallon and heating oil rose 2.2 percent to $2.24 a gallon. Natural gas was unchanged at $3.56 per 1,000 cubic feet.
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