Stocks gain after midterms as tech, health care, energy rise

NEW YORK (AP) — Stocks and bond prices are climbing Wednesday morning after Democrats won control of the House of Representatives in the U.S. midterm elections, while Republicans kept a majority in the Senate.

The outcome was largely what investors expected. While the potential for political gridlock in Washington increases, the market reaction has not been nearly as volatile as after other political events, such as the 2016 presidential vote. Historically markets have performed well after midterm elections and with split control of Congress.

The S&P 500 index gained 23 points, or 0.8 percent, to 2,779 as of 9:56 a.m. Eastern time. The Dow Jones Industrial Average rose 164 points, or 0.6 percent, to 25,795. The Nasdaq composite climbed 76 points, or 1 percent. to 7,449. The Russell 2000 index of smaller-company stocks added 4 points, or 0.3 percent, to 1,560.

"The market looks like it's accepted what they had expected, and that's good," said Quincy Krosby, chief market strategist at Prudential Financial.

It's not clear how a government divided between a Democrat-controlled House, a Republican Senate and Republican President Donald Trump might govern. 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.

Republicans had discussed a new round of tax cuts if they maintained full control over Congress, which would have expanded the government's deficits further and required it to issue more debt. Government bond yields spiked overnight after a batch of strong early results for some GOP candidates, but then headed lower as Democrats' fortunes improved, making a new tax cut package unlikely.

The yield on the 10-year Treasury note went as high as 3.25 percent Tuesday night from 3.21 earlier in the day. On Wednesday morning it dipped to 3.19 percent.

The U.S. dollar also weakened in the morning. The ICE US dollar index fell 0.5 percent. The U.S. currency fell to 113.31 yen from 113.40 yen, and the euro climbed to $1.1465 from $1.1413.

Major indexes in Europe climbed. The French CAC 40 jumped 1.2 percent, while the DAX in Germany rose 0.9 percent and Britain's FTSE 100 gained 1.2 percent.

The U.S. markets swooned in October, knocking the S&P 500 down nearly 7 percent, as investors worried about rising interest rates and the U.S.-China trade dispute. The S&P 500 is up about 3 percent so far in November.

October is historically a rough month for stocks, though markets usually rise after midterm elections regardless of how the political landscape may change because Wall Street is glad to have more certainty.

High-growth stocks were pummeled during the market's drop last month. Krosby said it will be worth watching to see if investors are willing to buy those stocks again or if they continue to prefer slower-growing, more "defensive" companies like utilities and household goods makers.

Big growth stocks headed higher Wednesday. Amazon jumped 2.8 percent to $1,688 while Microsoft rose 2.8 percent to $110.71. Google's parent company, Alphabet, picked up 2.1 percent to $1,092.

Democrats' win in the House means Republicans won't be able to take another shot at repealing the 2010 Affordable Care Act, which extended health insurance coverage to millions of Americans.

UnitedHealth, the largest U.S. health insurer, gained 3.7 percent to $372.35 and Anthem added 3.9 percent to $282.48. Voters in Idaho, Utah and Nebraska all voted to expand Medicaid.

Molina, a provider of Medicaid-related services, surged 6.4 percent to $132.16 and Medicare and Medicaid coverage provider WellCare picked up 3.2 percent to $264.64.

The election had implications for various sectors of the market. Marijuana growers were on track for gains Wednesday morning after voters in Michigan passed a ballot measure to legalize marijuana, while Missouri became the 31st state to approve marijuana for medical use. Utah was also considering that step. A marijuana legalization measure in North Dakota was defeated. Tilray advanced 5.8 percent to $112.03.

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 climbed 6.1 percent to $58.09 and Noble rose 3.1 percent to $27.88.

Oil prices broke out of a recent losing streak. Benchmark U.S. crude picked up 0.5 percent to $62.51 a barrel in New York, and Brent crude, the standard for international oil prices, rose 1 percent to $72.87 a barrel in London.

It's not clear how the election's outcome will affect the Trump policy Wall Street might be most concerned about: his pursuit of an "America first" trade strategy that has drawn the U.S. and China, the world's two biggest economies, into a trade war. Trump has imposed taxes of up to 25 percent on $250 billion of Chinese imports, and Beijing has responded with tariffs on $110 billion of American goods.

"A split Congress will, in all likelihood, not stop Trump from doubling down on tariffs with China," said Neil Wilson, chief markets analyst at Markets.com.

In Asia, Japan's benchmark Nikkei 225 fell 0.3 percent while South Korea's Kospi slipped 0.5 percent. But Hong Kong's Hang Seng edged 0.1 percent higher.

A primary concern in Asia is the potential for trade tensions to hobble growth for export-reliant economies.

The Federal Reserve is also meeting Wednesday and Thursday. It's not expected to raise interest rates this month, but investors believe it will do so in December.

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Pan Pylas in Europe and Yuri Kageyama in Tokyo contributed to this report.