The stock market delivered a sharp verdict on the election results Wednesday, rallying broadly after Democrats won control of both the House of Representatives and the Senate, along with key gubernatorial races in Texas and Georgia. Beneath the surface, traders rapidly sorted winners from losers across nearly every sector.
The incoming Democratic Congress is expected to serve as a counterweight to President Donald Trump's agenda, which has included tax cuts and policies that sent inflation higher, such as tariffs and the Iran war. In a note Wednesday, Wells Fargo Investment Institute said, "Democratic control could slow the push for deregulation in financials, energy and digital assets," while adding, "We still believe both parties have an incentive to compromise on data center location and AI generally."
Clean energy stocks were among the day's biggest winners as investors bet Democrats will push back against the Trump administration's rejection of clean energy policies. Nextpower jumped more than 11.2%, Canadian Solar rallied 6.7%, Nextera Energy added 4.9%, First Solar climbed 4.6%, Plug Power gained 3.6% and Sunrun ticked 1.3% higher.
Healthcare names surged on optimism that healthcare spending cuts could slow or be reversed, and that enhanced subsidies in Affordable Care Act plans might be extended. Centene led the group with a 12.6% gain, followed by Universal Health Services up 10.9%, HCA Healthcare up 10.3%, Tenet Healthcare up 9.6%, Molina Healthcare up 8.9% and Elevance Health up 4.9%.
Elon Musk's companies took a hit after Democrats won the gubernatorial, Senate and attorney general races in Texas while also wresting control of the Texas House of Representatives. Tesla shed 3.3% and SpaceX lost 3.8%. Musk, the CEO of both companies, spent at least $474 million backing Republican candidates in the midterms, including $224 million in Texas, where Tesla and SpaceX are headquartered.
Defense contractors fell on concern that Democrats could challenge military spending. Lockheed Martin tumbled 6.9%, Northrop Grumman sank 4.5%, Howmet Aerospace fell 4.3%, RTX slipped 2.4% and Palantir Technologies shed 2.1%. The Trump administration has requested $1.5 trillion for national defense in fiscal 2027 and is separately seeking an $87.6 billion supplemental appropriation for fiscal 2026, largely due to the Iran conflict. Drone stocks also dropped, with Kratos Defense & Security Solutions down 12.3%, Red Cat down 10.4%, Unusual Machines down 9%, AeroVironment down 8.3% and Ondas down 7%.
Data center stocks moved lower amid worries about restrictions or moratoriums on AI infrastructure buildouts, with construction limits passed in some states and a Democratic governor-elect in Texas who promised a moratorium. CoreWeave, described as the poster child for fears over massive AI-related debt, slumped 9.9%, while Iren dropped 11.2% and Nebius fell 6.7%. AI infrastructure names Comfort Systems and Vistra lost 15.1% and 13.8%, respectively, and Micron Technology fell 7%. Still, five of the Magnificent Seven rallied, with Microsoft jumping 6.7%, Apple rising 5.3% to touch an all-time high, Alphabet gaining 3.2% and Meta adding 1.4%.
A consumer relief trade also took hold, reflecting how affordability and high prices shaped the election. Housing stocks Pulte, D.R. Horton and Lennar gained roughly 7.2%, 8.1% and 7.1%, respectively. Airlines climbed, with United Airlines up 8%, Delta Air Lines up 7.2%, Southwest Airlines up 6.8% and American Airlines up 6.3%. Booking Holdings rallied 9.8%, Carnival increased 7.3%, and Norwegian Cruise Line and Royal Caribbean added 6.8% and 6.4%. Consumer staples also caught a bid, with Dollar Tree soaring 9.6%, Dollar General advancing 8.5%, Conagra Brands up 7%, Constellation Brands up 5.3% and Walmart up 3.5%.
The GOP's wide losses also dragged down President Donald Trump's social media and technology company, Trump Media & Technology Group, which plunged 24.5% and hit a 52-week low.
