Stocks Surge: Big Democratic Win Eases Uncertainty
Published as of: November 4, 2026, 9:12 a.m. ET
(Wednesday market open) Wall Street greeted Democrats' historic midterm victory by rebounding dramatically from overnight losses. Uncertainty dissipated quickly on outcomes that were beyond dispute across most states, ending fears of a drawn-out process and cementing Democratic control of both congressional chambers starting early next year. Though chip stocks initially fell on concerns about more data center regulation, shares of health care and alternative energy stocks surged.
"The scope of the Democratic victory exceeded even the wildest of predictions," said Michael Townsend, Schwab's managing director of legislative and regulatory affairs. "Markets typically respond positively to midterm elections being over, no matter what the outcome. Elections are inherently uncertain events and markets generally don't like uncertainty."
Though the election is top of mind, the struggling tech market enjoyed good news after the close yesterday as Advanced Micro Devices (AMD) and several other AI-adjacent firms reported strong earnings and guidance. Results followed yesterday's tech-driven rally that lifted most major indexes as investors tentatively dipped a collective toe back in. The PHLX Semiconductor Index (SOX) fell 12% in three days, but the S&P 500 Index is only 3% off its high. Leadership is rotating, which is different from "risk-off" behavior.
Three things to watch
- Election and the markets: A house divided cannot stand, President Lincoln once said. A divided government might suit Wall Street, however. "Markets generally don't mind political gridlock because it limits the possibility of sweeping policy decisions that could affect companies, earnings, and the markets," Townsend said. A split Congress also can limit fiscal expansion, possibly easing fears that heightened spending could raise inflation and rates. It might work that way because President Trump could veto Democrats' spending plans even as Democrats prevent or water down Trump's spending initiatives, almost like a tug-of-war, possibly keeping Treasury yields in check. The Cboe Volatility Index (VIX) retreated double digits this morning to near 18.3 from highs near 22 yesterday. Anything above 20 reflects uncertainty, and now election-related uncertainty is off the table, especially after President Trump said he'd recognize the results and vowed to work with Democrats. The results may not have much impact on one of Trump's key policies. "Tariffs remain largely a presidential lever," noted Liz Ann Sonders, chief investment strategist at the Schwab Center for Financial Research (SCFR).
- AMD, AI firms impress: AMD's solid results Tuesday after the close appeared to improve sentiment around AI and tech in general, though many AI stocks reversed gains as election results became clear. "The Democrats' victory is likely to put data centers on the policy agenda in 2027, something that has potentially huge implications for AI companies and hyperscalers," Townsend said. Though the election clipped AMD's strength early, over time the results could support shares of Nvidia (NVDA), its competitor reporting later this month. AMD's earnings per share of $2.09 easily beat FactSet consensus of $1.95, and revenue of $13.45 billion surged 45% annually, topping the $13.1 billion average guess. AMD also impressed with its fourth quarter revenue forecast. If AMD were alone, the picture might not change much. Instead, it was among several firms with shiny earnings reports late Tuesday. Super Micro Computer (SMCI) surged early after easily beating consensus for earnings and revenue. Guidance topped consensus, as well. Arista Networks (ANET), another AI-adjacent company, rose 6% early after an earnings beat. Guidance also topped estimates. Though info tech and technology are far and away the leaders in third quarter earnings growth, according to FactSet, other sectors are holding their own, with double-digit gains for materials, industrials, communication services, utilities, and real estate.
- Productivity data could provide AI insight: Though Friday's nonfarm payrolls dominates the data picture, there are other reports to watch before then, including tomorrow's October Challenger layoffs report and the government's first estimate of third quarter productivity growth. Productivity data at 8:30 a.m. ET tomorrow attracts more of a spotlight this time around because Federal Reserve Chairman Kevin Warsh has often said AI could improve this number. No single quarter tells the story, but a result near consensus of 3.1% year over year could support his thesis. Productivity rose just 1.4% in the second quarter. A key factor is unit labor costs. Wages aren't rising dramatically this year and unit labor costs were up just 1.2% in the second quarter. . Generally, rising productivity means the economy can grow more quickly with less inflation. One concern: Few companies outside of tech have said on quarterly earnings calls how they're seeing AI-related efficiency improve business. Separately, today's ADP monthly employment change showed 86,000 private sector jobs added last month, near expectations. Consensus for nonfarm payrolls is 65,000. "The labor market could move the needle for the December Federal Open Market Committee (FOMC) meeting," Sonders said.
On the move
- SpaceX (SPCX) and Tesla (TSLA) tumbled more than 6% and 5%, respectively, after a very bad night politically for their CEO, Elon Musk, who contributed millions of dollars to Republicans. Worries that he could face investigations in Congress contributed to the early plunge for his benchmark firms.
- Chip and AI-related stocks were modestly lower early, caught between strong overnight earnings and concerns about U.S. regulation that could get stricter with Democrats in control of Congress and the state of Texas, where the incoming Democratic governor has pushed for a moratorium on data centers. Some of the weaker performers included CoreWeave (CRWV), down 6.6%, and Oracle (ORCL), down 4%. AMD fell slightly after previously surging on earnings. But SMCI was up more than 2%.
- Qualcomm (QCOM) climbed almost 2% ahead of earnings this afternoon. The chipmaker could provide insight on demand trends for smartphones and automobiles, as well as the supply crunch it cited last quarter. In news this morning, CNBC reported that Qualcomm had signed a deal with SpaceX to provide network technology for U.S. mobile service.
- Arm Holdings (ARM) fell almost 2% ahead of its earnings this afternoon. Arm competes with Intel (INTC) in the PC market, where Intel cited weakness hurting its most recent quarter.
- McDonald's added 2% despite a quarterly miss on revenue consensus as U.S. comparable store sales suffered a slight drop. Global sales were more impressive and earnings per share beat estimates.
- CVS Health slipped 2% despite earnings and revenue that beat estimates and better guidance. Also, CVS plans to separate into two publicly traded health care companies by the first half of 2028. One will focus on health care solutions, the other will be a retail pharmacy and community health care firm.
- Block (XYZ) soared 9% after a solid earnings report for the financial services technology firm.
- Crypto-related stocks generally held their own early despite concerns that the industry might face investigations and more regulation from Democrats. Coinbase (COIN) rose 1%, but Circle Internet Group (CRCL) fell 2.7%. Strategy (MSTR) was flat. Bitcoin itself was up slightly.
- Health care firms were mixed early after the election. UnitedHealth (UNH), fell more than 2% amid concerns Democrats could force insurers to accept more low-income patients. But HCA Healthcare (HCA), a hospital operator, rose 5% on ideas Democrats could oppose further Medicaid cuts and possibly restore health care tax credits.
- Mining firms including Newmont (NEM), Hecla (HL), and Freeport McMoRan (FCX) all surged early Wednesday thanks to rallies in gold and silver, which appeared to gain on hopes that Democratic control of Congress could limit borrowing and spending, according to Bloomberg. Lower Treasury yields today on hopes for fiscal constraint also helped gold, which tends to compete with interest-paying bonds but doesn't pay yields itself.
- Alternative energy firms, expected to benefit from Democratic control in Washington, climbed early. Enphase Energy (ENPH) rose more than 3.5% and First Solar (FSLR) rose almost 7%.
- Chances of a Federal Reserve rate hike next month didn't move much on the election results. The odds are 81%, according to the CME FedWatch Tool, a bit higher than earlier this week.
- Archer-Daniels-Midland (AMD) fell 6% Tuesday after earnings. Revenue missed consensus for the quarter, but earnings and guidance beat.
More insights from Schwab
What are tax aware long-short strategies? Direct indexing can provide tax-loss harvesting opportunities for investors, but as portfolios age and bull markets persist, losses can become harder to find. Tax-aware long-short strategies use leverage, long positions, and short positions to potentially create more tax-loss harvesting opportunities for investors and have gained popularity.
Swing-trading tips: Buying low and selling high makes logical sense but identifying those inflection points is easier said than done. Our new trading video shows how to implement and interpret regression channels.
Chart of the day
Data source: Nasdaq. Chart source: thinkorswim® platform.
Past performance is no guarantee of future results.
For illustrative purposes only.
The Nasdaq-100® Index (NDX—candlesticks) is closely associated with the chip and AI market, and just emerged yesterday from its recent 10% correction. The dramatic dive took less than a month, and now the index hovers just above its 200-day moving average (green line). It hasn't closed below that since early April, and when it did venture under the 200-day then it quickly bounced back. This puts the index at a key inflection point, and a drop below the July lows could set up a test of the 2026 low near 22,840.
The week ahead
Wednesday, November 4: ADP October employment change, October ISM Services PMI®, and expected morning earnings from McDonald's (MCD), Uber (UBER), Novo Nordisk (NVO), CVS Health (CVS), and Datadog (DDOG). Expected afternoon earnings from Arm Holdings (ARM), Qualcomm (QCOM), McKesson (MCK), AppLovin (APP), Motorola (MSI), DoorDash (DASH), and Allstate (ALL).
Thursday November 5: Third quarter productivity-preliminary, Challenger job cuts, and expected morning earnings from ConocoPhillips (COP), Sony Group (SONY), Southern (SO), Duke Energy (DUK). Expected afternoon earnings from Cloudflare (NET), Airbnb (ABNB), and Monster Beverage (MNST).
Friday, November 6: October nonfarm payrolls, October unemployment, preliminary November University of Michigan Consumer Sentiment, and expected morning earnings from Enbridge (ENB), Moderna (MRNA), Humana (HUM), and Vistra (VST).
Monday, November 9: Expected morning earnings from Constellation Energy (CEG) and Barrick Mining (B). Expected afternoon earnings from Occidental Petroleum (OXY) and Rocket Lab (RKLB).
Tuesday, November 10: October CPI and core CPI and expected afternoon earnings from CoreWeave (CRWV) and Rigetti Computing (RGTI).
Wednesday, November 11: No major earnings or data expected. U.S. bond market closed for Veterans Day.
Explore more topics
This material is intended for general informational and educational purposes only. This should not be considered an individualized recommendation or personalized investment advice. The securities, investment products and investment strategies mentioned are not suitable for everyone. Each investor needs to review an investment strategy for their own particular situation before making any investment or trading decisions.
For illustrative purposes only. Individual situations will vary. Not intended to be reflective of results you can expect to achieve.
Investing involves risk, including, for some products, more than your initial investment.
Past performance is no guarantee of future results.
The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.
Supporting documentation for any claims or statistical information is available upon request.
Diversification and rebalancing strategies do not ensure a profit and do not protect against losses in declining markets.
Indexes are unmanaged, do not incur management fees, costs, and expenses (and/or "transaction fees or other related expenses"), and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions. For additional information about the indices and terms shown, please visit www.schwabassetmanagement.com/resources/glossary.
The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.
Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed-income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.
Digital currencies such as bitcoin are highly volatile and not backed by any central bank or government. Digital currencies lack many of the regulations and consumer protections that legal-tender currencies and regulated securities have. Due to the high level of risk, investors should view digital currencies as a purely speculative instrument.
All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.
Schwab does not recommend the use of technical analysis as a sole means of investment research.