Democratic midterm landslide sends stock futures higher

Democrats win historic landslide as voters show their disklike of higher Oil prices.
Dow Jones, S&P 500 and NASDAQ futures rise in Wednesday premarket.
Democratic Party wins both House and Senate alongside plenty of governorships.
Solar and health insurance stocks rise on hope for subsidies.

Clay Webster FXStreet

The US stock market is seeing an early bullish tilt on Wednesday after the US midterms turned into a seismic win for the Democratic Party. Dow Jones futures have risen 1.6% in the premarket, while S&P 500 futures gain 0.9% and NASDAQ 100 futures rise a less decisive 0.3% at the time of publishing. While some of the gains are indeed related to the Democratic win, much of it is due to the market exalting over the end of uncertainty and the ability to plan the future.

Though the vote is still being counted in many states, the Democrats have flipped at least seven Senate seats and about 30 House districts in an overwhelming sign that voters were disgruntled over President Trump's leadership and rising Oil prices stemming from the war with Iran. This will place both the upper house and the lower house of Congress in Democratic hands and lead to divided government for the final two years of the Trump presidency.

In a sign of just how historic the landslide is, betting markets like Kalshi give Democrat Scott Colum a 78% chance of winning Mississippi, a deeply Republican state that hasn't elected a Democratic senator in about four decades and hasn't had a black senator since 1881. Less than 100 votes separate Colum from Republican candidate Cindy Hyde-Smith with 96% of the vote tallied.

Solar appears to be one of the big winners from Tuesday. The Invesco Solar ETF (TAN) has jumped over 8% as markets expect Democrats to reinstate solar tax incentives once they assume Congressional leadership in January. Though Trump said he would be quick to exercise his veto power in regard to Democratic legislation, the market believes Democrats will push the solar tax rebates as part of any funding compromise. The Democrats also picked up a number of high-profile governor races, many in unexpected states like Texas and Iowa, which could help promote clean-energy policies at the state level.

Additionally, healthcare insurers are leading the premarket gains. HCA healthcare (HCA) rose over 6% in the premarket as investors bet that a Democratic Congress will reinstall insurance subsidies for lower-income Americans.

Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

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