The outcome of the midterm elections was good for the stock market in general, mostly because it didn’t produce any big surprises. Big-name technology and consumer and health care companies soared as the S&P 500 index closed at its highest in four weeks
Democrats won control of the House of Representatives while Republicans kept a majority in the Senate, as most polls had suggested. It’s not clear how the divided Congress will work with Republican President Donald Trump, but if the possibilities for compromise and big agenda items seem limited, Wall Street is fine with that because it means politics is that much less likely to crowd out the performance of the strong U.S. economy.
It’s not clear how the elections will affect the Trump policy Wall Street might be most concerned about: the trade dispute with China. Trump has imposed taxes of up to 25 percent on $250 billion of Chinese imports and threatened additional tariffs on top of those. Beijing has responded with tariffs on $110 billion of American goods.
A primary concern in Asia is the potential for trade tensions to hobble growth for export-reliant economies.
Economists at S&P Global, Oxford Economics and the Bank of America all agreed that government gridlock will likely result from the Democrats winning control of the House. But they don’t think a stalemate will automatically hinder economic growth.
It’s more likely that government will play less of a role in spurring economic growth in 2019 and 2020. As a result, the health of the global economy, interest rates set by the Federal Reserve, and spending by U.S. consumers and companies will have a bigger impact on determining the pace of growth.
The Federal Reserve is not expected to raise interest rates this month, but investors believe it will do so in December.
Health insurers rose sharply as investors anticipated that any prospects of repealing the Affordable Care Act, which expanded health insurance to millions of Americans, diminished greatly now that Democrats control the House of Representatives.
Marijuana companies soared after several states voted to partly legalize pot, and oil and gas companies benefited from the defeat of a ballot measure in Colorado that might have restricted drilling.
Industrial companies made strong gains, but they didn’t do as well as the rest of the market. While some investors hope that Trump and Congressional leadership will pass an infrastructure stimulus bill, they’ve had those hopes dashed more than once since he took office.
Here’s a look at industries and companies that were affected in various ways by the outcome of the election.
Health insurers, hospital operators and companies that run Medicaid health programs all jumped. Democrats’ victory in the House means Republicans won’t be able to pass legislation repealing the 2010 Affordable Care Act, a goal for the party ever since the law was passed during President Barack Obama’s first term. The bill expanded health insurance coverage, and the election results mean more stability for insurers and more reimbursement for hospitals.
Voters in Idaho and Nebraska approved expansions of the federal-state Medicaid program, which provides benefits to poor and disabled people. Winning gubernatorial candidates in Maine and Kansas also support expanding Medicaid benefits to more people.
The largest U.S. health insurer, UnitedHealth added 4.2 percent to $274.63 and Anthem rose 6.6 percent to $289.94. The largest hospital company, HCA, gained 4.7 percent to $141.65. Medicaid services company Molina jumped 10.5 percent to $137.32.
Voters in Michigan passed a ballot measure to legalize marijuana while a similar measure in North Dakota was defeated. Missouri became the 31st state to approve marijuana for medical use, while Utah also voted on a medical marijuana proposition. A marijuana legalization measure in North Dakota was defeated.
The stocks built on their gains in the afternoon following the resignation of Attorney General Jeff Sessions. Marijuana remains illegal at the federal level and Sessions had promoted more aggressive enforcement of those laws. Tilray soared 30.6 percent to $139.60 and Canopy Growth climbed 8.2 percent to $46.07.
Oil drillers Anadarko Petroleum and Noble Energy rallied after Colorado voters rejected a measure that could have sharply reduced oil and gas drilling, including the method known as fracking, by requiring new oil and gas wells to be farther from occupied buildings than allowed under current law. Anadarko gained 5.7 percent to $57.89 and Noble picked up 4.2 percent to $28.16.
Big tech and retail companies made huge gains. The stocks aren’t expected to benefit from any specific vote or change in policy, but with the elections over, investors were willing to take bigger risks and bet that the global economy will keep growing. Amazon jumped 6.9 percent to $1,755.49 and Microsoft climbed 3.9 percent to $111.96.
Safer, steadier stocks generally rose, but they didn’t do as well as the rest of the market. Those stocks had surged in October as the rest of the market struggled, but on Wednesday, utility company AES fell 2.6 percent to $15.60. Shopping mall operator Simon Property Group rose 2 percent to $187.27, but consumer products maker Church & Dwight lost 2.6 percent to $66.11.
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