The S&P 500 Index ($SPX) (SPY) closed up +1.58% on Wednesday, the Dow Jones Industrial Average ($DOWI) (DIA) closed up +3.03%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.91%. December E-mini S&P futures (ESZ26) rose +1.60%, and December E-mini Nasdaq futures (NQZ26) rose +1.08%.
US stocks settled sharply higher on Wednesday, with the Dow Jones Industrials posting a 2-month high. The Democratic sweep of Congress in the US midterm elections has erased market uncertainty and bolstered speculation that Democratic control of Congress will curb further fiscal expansion, easing concerns about government borrowing and burgeoning deficits. Stock index futures initially fell sharply in overnight trading due to concerns about regulatory scrutiny, as a Democratic majority in Congress could dampen enthusiasm for the AI infrastructure buildout.
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Stocks also found support from Monday’s US economic news, which showed employers added more jobs than expected in the Oct ADP employment report and an unexpected narrowing of the US trade deficit in September, a supportive factor for Q3 GDP. Also, service price pressures unexpectedly eased in the Oct ISM services index. In addition, Wednesday’s -8% plunge in crude oil prices eased inflation expectations, pushed bond yields lower, and boosted market sentiment. The 10-year T-note yield fell -7 bp to 4.89%.
The US Oct ADP employment change rose by +86,000, stronger than expectations of +67,000.
The US Sep trade deficit unexpectedly shrank to -$105.0 billion from -$105.7 billion in Aug versus expectations of an increase to -$107.9 billion, a positive factor for Q3 GDP.
The US Oct ISM services index fell -0.4 to 54.5, weaker than expectations of 54.8. The Oct ISM services prices paid sub-index unexpectedly fell -1.0 to 73.0 versus expectations of an increase to 74.6.
US MBA mortgage applications fell -1.2% in the week ended October 30, with the purchase mortgage sub-index down -2.0% and the refinancing mortgage sub-index up +0.1%. The average 30-year fixed-rate mortgage fell -7 bp to 7.30% from 7.37% the prior week.
The US Treasury announced no changes in its auction sizes and set its November quarterly refunding at $125 billion, in line with estimates. The Treasury will auction $58 billion of 3-year T-notes on November 9, $42 billion of 10-year T-notes on November 10, and $25 billion of 30-year T-bonds on November 12.
Dec WTI crude oil prices (CLZ26) plummeted more than -8% on Wednesday to a 4-week low. Crude prices opened lower on Wednesday when President Trump eased concerns about escalation of the US-Iran war when he played down the prospect of fresh strikes on Iran. Crude prices were also pressured on Wednesday after weekly EIA crude inventories fell less than expected and US crude production rose to a record.
Losses in crude prices accelerated on Wednesday when Vice President Vance directly attributed the Democratic sweep of Congress in Tuesday’s midterm elections to the Iran war. Senate Minority Leader Schumer pledged a quick end to the Iran war, saying he had the backing of some Republican lawmakers. The Democrats' retaking of Congress in the US midterm elections has fueled speculation that the US may try to end the US-Iran conflict sooner rather than later.
Stocks are supported by the prospect of solid quarterly earnings. According to data compiled by Bloomberg Intelligence, Q3 S&P 500 earnings are expected to climb by +31% from a year earlier, up from a July estimate of 22%. As of Wednesday, 372 of the S&P 500 companies have reported results, with 84% beating estimates.
Overseas stock markets settled mixed on Wednesday. The Euro Stoxx 50 rallied to a 4-week high and closed up +1.97%. China’s Shanghai Composite climbed to a 1-week high and closed up +2.16%. Japan's Nikkei-225 Stock Average fell to a 5.5-month low and closed down -1.42%.
Interest Rates
December 10-year T-notes (ZNZ6) closed up by +12.5 ticks on Wednesday. The 10-year T-note yield fell -7.4 bp to 4.888%. T-note prices rallied on Wednesday after the Democratic sweep of Congress in the midterm elections led to a divided government that could reduce the risk of additional spending or tax cuts that would require more Treasury issuance. Also, Wednesday’s -8% plunge in WTI crude oil prices to a 4-week low knocked inflation expectations lower, a bullish factor for T-notes. The 10-year breakeven inflation rate fell to a 2.75-month low of 2.248% on Wednesday.
Limiting gains in was the larger-than-expected increase in the Oct ADM employment change, a hawkish factor for Fed policy. Also, Wednesday’s sharp stock rally curbed safe-haven demand for T-notes.
The markets are now pricing in an 81% chance of a +25 bp rate hike at the FOMC’s next meeting on December 8-9.
European government bond yields moved lower on Wednesday. The 10-year German bund yield fell to a 2-month low of 3.263% and finished down -5.8 bp to 3.272%. The 10-year UK gilt yield dropped to a 2-month low of 5.121% and finished down -13.1 bp to 5.129%.
The Eurozone Oct CPI rose +4.0% y/y, right on expectations and the fastest pace of increase in more than 3 years. Oct core CPI rose +2.5% y/y, unchanged from Sep and right on expectations.
The Eurozone Oct S&P composite PMI was revised downward by -0.2 to 51.7 from the previously reported 51.9.
The markets are now pricing in a 79% chance of a +25 bp rate hike at the ECB’s next policy meeting on December 17.
US Stock Movers
The Magnificent Seven Technology stocks, sans Nvidia and Tesla, rallied sharply on Wednesday and boosted the broader market. Amazon.com (AMZN) and Microsoft (MSFT) closed up more than +6%, and Apple (AAPL) closed up more than +5%. Also, Alphabet (GOOGL) closed up more than +3%, and Meta Platforms (META) closed up more than +1%.
Mining stocks rose sharply on Wednesday after gold prices surged more than +3% and silver jumped more than +5%. Hecla Mining (HL) closed up more than +13%, and Newmont Corp (NEM) closed up more than +9%. Also, Anglogold Ashanti (AU), Coeur Mining (CDE), and Barrick Mining (B) closed up more than +8%, and Freeport McMoRan (FCX) and Southern Copper (SCCO) closed up more than +1%.
Health insurance stocks moved higher Wednesday on speculation that a Democratic controlled Congress could roll back the Medicaid cuts in last year’s tax and spending bill. Centene (CNC) closed up more than +12%, and HCA Healthcare (HCA) and United Health Services (UHS) closed up more than +10%. Also, Molina Healthcare (MOH) closed up more than +8%, and Elevance Health (ELV) closed up more than +4%. In addition, the Cigna Group (CI) and Cardinal Health (CAH) closed up more than +3%.
Airline stocks and cruise line operators rallied on Wednesday amid an -8% plunge in crude oil prices to a 4-week low, which lowers fuel costs and boosts the companies' profitability prospects. Alaska Air Group (ALK) and United Airlines Holdings (UAL) closed up more than +8%, and Carnival (CCL) and Delta Air Lines (DAL) closed up more than +7%. Also, American Airlines Group (AAL), Southwest Airlines (LUV), Royal Caribbean Cruises (RCL), and Norwegian Cruise Line Holdings (NCLH) closed up more than +6%.
Defense contractors retreated on Wednesday on concerns that a Democratic-controlled Congress could bring tighter oversight, funding delays, and curtailed military spending. AeroVironment (AVAV) closed down more than -8%, and L3Harris Technologies (LHX) and Lockheed Martin (LMT) closed down more than -6%. Also, Huntington Ingalls Industries (HII) and Northrop Grumman (NOC) closed down more than -4%, and RTX Corp (RTX) and General Dynamics (GD) closed down more than -2%.
Energy producers and service providers fell sharply on Wednesday after WTI crude oil plunged more than -8% to a 4-week low. Marathon Petroleum (MPC) closed down more than -8%, and Devon Energy (DVN) closed down more than -7%. Also, APA Corp (APA) closed down more than -6%, and ConocoPhillips (COP), Valero Energy (VLO), Baker Hughes (BKR), and Occidental Petroleum (OXY) closed down more than -5%. In addition, Phillips 66 (PSX), ExxonMobil Holdings (XOM), and Diamondback Energy (FANG) closed down more than -4%, and Chevron (CVX) and Halliburton (HAL) closed down more than -3%.
Cloud infrastructure stocks fell on Wednesday on concerns that the Democrat controlled Congress could boost regulations to limit the building of data centers. CoreWeave (CRWV) closed down more than -9%, and Lumentum Holdings (LITE) closed down more than -7%. Also, Applied Digital (APLD) and Nebius Group NV (NBIS) closed down more than -6%, and Oracle (ORCL) closed down more than -1%
Mosaic (MOS) closed up more than +17% to lead gainers in the S&P 500 after reporting Q3 net sales of $3.10 billion, above the consensus if $3.04 billion.
Block (XYZ) closed up more than +15% after reporting Q3 adjusted EPS of $1.13, better than the consensus of $1.02.
Zimmer Biomet Holdings (ZBH) closed up more than +13% after raising its full-year revenue forecast to +4.4% to +4.9% from a previous view of +3.9% to +4.9%.
Arista Networks (ANET) closed up more than +4% after reporting Q3 revenue of $3.66 billion, above the consensus of $3.33 billion, and forecasting Q4 revenue of $3.9 billion to $4.0 billion, stronger than the consensus of $3.57 billion.
Amdocs Ltd (DOX) closed down more than -30% after forecasting Q1 revenue of $955 million to $995 million, weaker than the consensus of $1.2 billion.
Fidelity National Information Services (FIS) closed down more than -23% to lead losers in the S&P 500 after cutting its full-year adjusted EPS estimate to $5.82 to $5.89 from a previous estimate of $6.15 to $6.24, weaker than the consensus of $6.20.
Datadog (DDOG) closed down more than -14% to lead losers in the Nasdaq 10 after its Q4 revenue outlook was seen as disappointing by analysts who were expecting an acceleration due to AI demand.
Skyworks Solutions (SWKS) closed down more than -3% after forecasting Q1 revenue of $1.8 billion to $1.9 billion, below the consensus of $2.0 billion.
Tesla (TSLA) and Space Exploration Technologies Corp (SPCX) closed down more than -3% on concerns that a Democratic-controlled Congress will lead to tighter regulations that stifle growth in the companies of Elon Musk, who aligned himself with GOP politicians.
Earnings Reports (11/5/2026)
Air Products and Chemicals Inc (APD), Airbnb Inc (ABNB), Akamai Technologies Inc (AKAM), Ameren Corp (AEE), Axon Enterprise Inc (AXON), Becton Dickinson & Co (BDX), Bio-Techne Corp (TECH), Camden Property Trust CPT), Cardinal Health Inc (CAH), Cigna Group/The (CI), ConocoPhillips (COP), Consolidated Edison Inc (ED), Cummins Inc (CMI), Devon Energy Corp (DVN), DTE Energy Co (DTE), Duke Energy Corp (DUK), EOG Resources Inc (EOG), Evergy Inc (EVRG), Global Payments Inc (GPN), Iron Mountain Inc (IRM), Kimberly-Clark Corp (KMB), Live Nation Entertainment Inc (LYV), Mettler-Toledo International Inc (MTD), Microchip Technology Inc (MCHP), Monster Beverage Corp (MNST), Parker-Hannifin Corp (PH), Ralph Lauren Corp (RL), Regency Centers Corp (REG), Rockwell Automation Inc (ROK), Sempra (SRE), Simon Property Group Inc (SPG), Solventum Corp (SOLV), Southern Co/The (SO), Tapestry Inc (TPR), Targa Resources Corp (TRGP), Verisk Analytics Inc (VRSK), Viatris Inc (VTRS), Wynn Resorts Ltd (WYNN), Zoetis Inc (ZTS).
On the date of publication, Rich Asplund did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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