U.S. stocks on Wednesday registered the best day in weeks following midterm election votes that resulted in a split Congress, as expected, but removed a key source of anxiety for Wall Street investors.
The Dow Jones Industrial Average rose 544 points, or 2.1%, at 26,179 (on a preliminary basis), marking the highest close for the blue-chip gauge since Oct. 9, according to FactSet data. The S&P 500 index also registered its best day in about three weeks, finishing 2.1% at 2,813, and closing above a psychological level at 2,800. The Dow closed above its short-term 50-day moving average, while the Nasdaq and the S&P 500 surged above their 200-day moving averages for the first time since October. The Nasdaq Composite Index finished the session with a 2.6% advance to end at 7,570, marking its best day since Oct. 25.
The midterm elections resulted in Democrats taking control of the House while the GOP tightened their grip on the Senate. The resulting gridlock has historically been a boon for the market but investors also pointed to seasonal trends which often see equity markets climbing in the final months of the year, as institutional investors position for the coming year.
Moreover, stocks took a drubbing in October, which also has helped to feed more opportunistic buying of stocks. It is important to note that Thursday will see the Federal Reserve release an update to its policy statement at 2 p.m. Eastern Time, a factor that could provide further insights about the pace of rate hikes in December and 2019.
Source : Market Watch