Stock market soars
End of midterms spurs broad Dow Jones gains
WASHINGTON — Major U.S. stock indexes soared Wednesday, with the Dow Jones industrial average gaining nearly 550 points, after the uncertainty of contentious midterm elections ended with the most widely expected result: a Democratic takeover of the House and Republicans retaining the Senate majority
The Dow’s gain of 545.29 points, or 2.1 percent, to 26,180.30 was broadly based, with healthcare stocks performing especially well as the threat of an Obamacare repeal became less likely. The Standard & Poor’s 500 index had a similar percentage jump while the technology-heavy Nasdaq composite was up about 2.6 percent.
“Mostly it’s a big sigh of relief in that the midterm elections are behind us and a surprise didn’t happen,” said Michael Arone, chief investment strategist at asset manager State Street Global Advisors, who called the gains a “relief rally.”
A divided Congress likely means gridlock in Washington for the next two years, but that would be just fine with businesses that already have received a large tax cut and sweeping relaxation of regulations under Trump and congressional Republicans.
That agenda has temporarily boosted the U.S. economy, and the election results are unlikely to change its trajectory. Although growth is projected to slow in the next two years, that’s an outcome that had been expected even if the GOP maintained control of the House.
Even though Democrats opposed the-tax cut legislation because much of it was focused on corporations and the wealthy, the party won’t be able to do a large-scale rollback of the cuts given that Republicans retained control of the Senate and Trump would veto such a bill anyway.
But at a White House news conference Wednesday, Trump said he’d be open to raising tax rates on corporations and/or the wealthy in exchange for a deal with Democrats on middleclass tax cuts.
“If the Democrats come up with an idea for tax cuts … I will absolutely pursue something even if it means some adjustment” in the new lower rates, he said. The corporate rate was slashed to 21 percent from 35 percent, and the top individual tax rate was reduced to 37 percent from 39.6 percent.
House Democratic leader Nancy Pelosi, D-Calif., said Wednesday that her party’s new House majority would “strive for bipartisanship” and said she had talked Trump on election night about working together on infrastructure spending. She also said she hoped to work with him on lowering the cost of prescription drugs.
“We believe that we have a responsibility to seek common ground where we can,” she said at a Capitol Hill news conference. “Where we cannot, we must stand our ground. But we must try.”
Trump said Wednesday he was open to working on those issues — unless House Democrats try to investigate him and his administration.
“Hopefully, we can all work together next year to continue delivering for the American people, including on economic growth, infrastructure, trade, lowering the cost of prescription drugs,” he said.