Wall Street advanced on Wednesday clocking its best post-midterm performance since 1982 after the results of the elections were broadly in keeping with market expectations for a divided Congress.
The S&P 500 ended 2.1 per cent higher at 2,813.81 nabbing its best day in three weeks and its third-biggest one-day gain of 2018.
The benchmark index saw a broad-based rally with consumer discretionary leading the way, rising 3.2 per cent, while healthcare and tech followed suit with gains of about 2.9 per cent each. Consumer staples was the laggard, rising 0.6 per cent.
Meanwhile, the Dow Jones Industrial Average was up 2.1 per cent to 26,180.64, while the Nasdaq Composite rose 2.6 per cent to 7,570.75. Meanwhile, the Russell 2000 index of small-cap stocks was up 1.5 per cent to 1,578.84.
Investors welcomed news of a divided Congress as it was largely what had been priced in ahead of Tuesday’s vote and the results eased concerns about quick changes to policy.
However, certain ballot measures did move stocks. DaVita, the US company that runs dialysis clinics, was among the top gainers on the S&P 500 after California rejected proposition 8, a ballot measure to cap profits for dialysis clinics.
Meanwhile, cannabis stocks got a bump after Michigan passed a bill to legalise recreational marijuana and then got another bump after attorney-general Jeff Sessions, who opposed the federal legalisation of marijuana, resigned.
Markets now look ahead to the Federal Reserve’s monetary policy-setting meeting on Thursday, when the Fed is widely expected to leave rates unchanged. “The risk is for a modest dovish market interpretation from mark-to-market edits to the description of recent data in the statement,” according to strategists at TD Securities.
Elsewhere in markets, the yield on the 10-year US Treasury was down 0.4 basis points to 3.221 per cent, while that on the two-year was up 2.1 basis points to 2.948 per cent. Yields move inversely to price.
The dollar index, a gauge of the buck against a weighted basket of peers, slid 0.2 per cent to 96.09.