Dow scores its best day in 18 months in a broad relief rally after Democrats sweep to power in Congress

By Joy Wiltermuth

The Dow logged its best day since President Trump backpaddled on his 'liberation day' tariffs on April 9, 2025

Stocks surged, oil prices plunged and bond yields fell Wednesday after Democrats clinched control of Congress.

Stocks surged, oil prices plunged and bond yields fell Wednesday on optimism around a quicker end to the Iran war now that Democrats have clinched control of Congress.

The Dow Jones Industrial Average DJIA climbed 1,569 points, or 3%, to end at 53,356.12 - cementing its best day since April 9, 2005, when President Trump first paused his "liberation day" tariffs.

Semiconductor stocks and data centers also were in the headlines after Democrats swept the U.S. midterm elections to gain control of the House of Representatives and the Senate. Yet Wall Street's main focus was on the potential for a very unpopular war to start winding down.

"This is really a broad relief rally that I'd put at the feet of oil - and on the hope for a closer end of the Iran war," said Rob Haworth, senior investment strategist at U.S. Bank, on Wednesday afternoon.

Global oil prices (BRN00) plunged more than 8% to settle at $94.62 a barrel Wednesday. Surging crude prices in the eight months since the U.S. and Israel attacked Iran played a role in the 10-year Treasury yield's BX:TMUBMUSD10Y rise in October to a 24-year high, hotter recent inflation and the increased cost of capital for businesses and consumers.

While there are still months to go before the new Congress is seated, market participants on Wednesday were trying to look ahead, including to the possibility that the White House might take the midterm results "as a signal to wind down the conflict as expediently as possible," Haworth said.

The S&P 500 SPX and Nasdaq Composite COMP also enjoyed huge gains Wednesday, while small-cap stocks RUT, value names XX:RAV and defensive stocks XX:SP500.30 also rallied.

"That rhymes with history," said Kevin Gordon, head of macro research and strategy at Charles Schwab, noting that markets tend to do better when election results are known.

Indeed, the Cboe Volatility Index VIX, known as Wall Street's "fear gauge," tumbled more than 10% Wednesday.

Yet the day's strongest gains belonged to shares of the so-called hyperscalers, while chip stocks SOX and shares of neoclouds like CoreWeave (CRWV) struggled.

President Trump, speaking on camera Wednesday for the first time since the midterms, said he "probably" would work with Democrats in Washington. He also suggested that voters opposed high oil prices, not the war. The bulk of his comments were focused on ballroom renovations at the White House.

Vice President J.D. Vance blamed the war for the Republican midterm defeat, saying in a social-media post that the "main problem" was that "many people who voted for Trump/Vance in 2024 voted for Democrats in 2026."

Democrats are now set to control "the purse" of the U.S. government, noted David Kelly, chief global strategist at J.P. Morgan Asset Management. That means Trump's ability to pursue the Iran war could be significantly reduced.

But the "most important thing was the result was very clear," Kelly said of the election. "A week ago, there was uncertainty" around interference with ballots and if the president would accept the result, he said. "There's been a significant reduction in uncertainty over the past couple of hours."

-Joy Wiltermuth

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11-04-26 1629ET