The S&P 500 index rocketed 58.44 points, or 2.1 per cent, to 2,813.89, the Dow Jones Industrial Average jumped 545.29 points, or 2.1 per cent, to 26,180.30, the Nasdaq composite climbed 194.79 points, or 2.6 per cent, to 7,570.75.
While a divided Congress will make it harder for Trump’s administration to push through new legislation such as additional tax cuts, investors were not expecting a reversal of tax cuts and deregulation measures that have already been enacted.
“We’ve gotten the broad uncertainty out of the way,” said Chad Morganlander, senior portfolio manager at Washington Crossing Advisors.
Some strategists said Democratic control of the House means President Donald Trump would have a harder time gaining support for efforts to impose more regulations on Amazon.com, which rose 6 per cent providing the S&P 500’s biggest boost from a single stock.
But even as technology and healthcare stocks soared, investors questioned whether the sectors could now be more at risk of additional regulatory scrutiny.
Following a steep selloff in October, the S&P 500 was still roughly 5 per cent below its record high reached in December, as investors still had their eyes on rising interest rates and a US-China trade war.
The Federal Reserve began its two-day monetary policy meeting on Wednesday, but was not expected to raise rates until December.
Bank stocks were up but underperforming the broader market as Treasury yields slipped and investors bet that the divided Congress would hamstring any efforts for additional fiscal stimulus.
Health insurers Humana Inc, Anthem Inc and UnitedHealth Group Inc jumped to record highs as voters in three states approved expanding Medicaid programs for low-income people.