The Wall Street Stock Exchange opens sharply after the Democratic victory in the mid-term elections

The New York Stock Exchange opened sharply higher on Wednesday, after the clear Democratic victory in the mid-term elections in the United States, which reduced some of the political uncertainties but raised questions about the supervision of artificial intelligence (AI). In early trading, the Dow Jones rose 1.96%, the Nasdaq index gained 1.03% and the broader S&P 500 index rose 1.13%.

The Democrats signed a clear victory on Tuesday, with a majority acquired in both houses of Congress, during elections which turned into a disaster for Donald Trump and the Republicans. Even if the outcome was anticipated, “these results help to dispel some of the political vagueness” which persisted on the markets, Angelo Kourkafas, an analyst at Edward Jones, explains to AFP. “The market was above all reassured by the idea that the outcome of the election would not be contested,” notes Patrick O’Hare, of Briefing.com.

During the night, futures contracts on the main American stock indices fell sharply when the results were announced. “A certain movement of panic has seized investors, who have integrated the prospect of Democratic opposition to data center construction projects”, essential to the development of AI, explains David Morrison, of the broker Trade Nations. Wall Street owes its meteoric progress in recent years to enthusiasm for the advent of this technology.

Semiconductors - essential for building data centers - remained in the red at the opening on Wednesday, like the juggernaut Nvidia (-1.08%), Micron (-2.40%) or Intel (-2.99%). The shares of SpaceX and Tesla, the two groups led by American billionaire Elon Musk, fell by 3.46% and 3.78% respectively. Elon Musk spent a fortune in favor of the Republicans during these elections, without success, and even sees Texas, where he has moved all of his company headquarters, switching to the Democrats after Tuesday's mid-term elections.

Defense stocks were also sanctioned, such as Lockheed Martin (-5.70%) or RTX (-3.94%), while renewable energy stocks - a sector towards which the Republicans are hostile - were sought after (First Solar +11.26%, Sunrun +10.77%). The decline in oil prices on Wednesday and “geopolitical considerations also contribute to the rise in stocks,” estimates Patrick O’Hare of Briefing.com.

“If Donald Trump can still oppose any attempt by Congress to end the war against Iran (...), his administration will no longer be able to obtain additional funding for the Pentagon,” notes Stephen Brown, economist at Capital Economics. On the bond market, the yield on the ten-year American bond fell to 4.94%, after falling to 4.89% overnight, compared to 4.96% on Tuesday evening. For the markets, “the fact that Democrats control Congress (...) limits the possibility of adopting vast legislative or political measures that would increase public spending,” notes Mr. Kourkafas. According to the analyst, investors will now be able to turn again to “the fundamentals”, such as the official employment figures for October expected on Friday.