Stocks rallied Wednesday following the 2018 midterm elections that shifted the balance of power in Washington, with Wall Street preparing for the possibility of legislative obstacles within a divided Congress.
The Dow Jones Industrial Average jumped 2%, or more than 500 points, and the Nasdaq Composite surged 2.4%. The S&P 500 was up 2%. Democrats took control of the House early Wednesday morning, while Republicans expanded their majority in the Senate.
“In other words, certainty ruled the day,” said Paul Eitelman, a strategist at Russell Investments. “Had the unlikelier scenario of a Democratic takeover of both the House and the Senate won out, we think markets likely would have moved in more significant fashion in the days ahead.”
Shares of medical companies jumped, with the S&P 500 health care index up 1.9%. A repeal of the Affordable Care Act and other measures that could reduce medical costs were unlikely following the election results.
On top of that, three states passed measures to expand Medicaid programs. Health insurers to record highs, with Humana Inc gaining 6.5% and UnitedHealth Group rising 4.2%. DaVita surged nearly 13% after California rejected a cap on dialysis revenue.
Cannabis stocks extended gains after Attorney General Jeff Sessions, who opposes marijuana legalization, announced he was resigning at the request of President Donald Trump. Many anticipated his departure was imminent following months of tensions between the two. Matthew G. Whitaker, Sessions’ chief of staff, is expected to take over the post until a permanent replacement is nominated.
Tilray shares skyrocketed 28%, and Aphria shares gained 3.6%. The marijuana sector had already been climbing Wednesday after Michigan legalized recreational use of the substance, marking the first Midwestern state to do so. Utah and Missouri, meanwhile, passed legislation making marijuana legal for medical purposes.
Oil companies in Colorado rose after