Dow futures up 130 points as midterm elections fall in line with forecasts

Ayanna Pressley addresses an audience in Boston after becoming the first black woman elected to the U.S. House of Representatives from Massachusetts.

As-expected outcome sees Democrats take House, GOP retain Senate

Wall Street stocks were looking at a potentially upbeat start on Wednesday, as U.S. stock futures climbed in the wake of midterm elections that delivered no major surprises and led to a weaker U.S. dollar and mostly lower Treasury yields.

How are the benchmarks performing?

Dow Jones Industrial Average futures YMZ8, +0.74% rose 137 points, or 0.5%, to 25,778, while S&P 500 futures ESZ8, +0.95% gained 16 points, or 0.6%, to 2,775. Nasdaq-100 NQZ8, +1.12% jumped 60.25 points, or 0.8%, to 7,074. DJIA, +0.73%

On Tuesday, the Dow Jones Industrial Average DJIA, +0.73% rose 173.31 points, or 0.68%, to 25,635.01, the S&P 500 index SPX, +0.96% rose 0.63%, and the Nasdaq Composite Index COMP, +1.14% climbed 0.64%, or 47.11 points, at 7,375.96.

The Dow closed at a session high, while the S&P 500 and Nasdaq ended the day just shy of Tuesday’s best levels.

What’s driving the market?

U.S. midterm election results largely fell in line with forecasters’ prediction, with Democrats set to take control of the House and Republicans on track to strengthen their grip on the Senate. The results may have implications for President Donald Trump’s legislative agenda, but for now, markets look upbeat as any immediate uncertainty fades.

There have also been signals of compromise from Trump, who talked about trying to work with the opposite side as indications grew earlier in the week that Democrats would see a House victory.

Investors may quickly turn their attention to a two-day Federal Reserve meeting that wraps up on Thursday, though the central bank isn’t expected to make a move on interest rates.

Which stocks are in focus?

The prospect of gridlock in Washington, and the defeat of a ballot measure in California that would have capped profits on dialysis services, are boosting healthcare stocks Wednesday morning. Shares of DiVita Inc. DVA, +11.15% up 8.3%, Abiomed ABMD, +6.68% stock is rising 7.7% and Henry Schein Inc. HSIC, +1.87% shares are rallying 3.4% in premarket trade.

Energy stocks are also having a good morning, as oil prices have risen 1% early Wednesday. Noble Energy Inc. NBL, +3.00% is rising 11% in premarket trade, while Anadarko Petroleum Corp APC, +6.26% is up 9.6% and Pioneer Natural Resources Co. PXD, +6.50% has risen 4.4%.

Shares of Michael Kors Holdings Ltd. KORS, -15.32% are tumbling 12.2% in premarket trade, after the fashion luxury group missed revenue expectations in a Wednesday morning earnings release.

Coty Inc. COTY, -20.71% stock is down 12.8% before the open, after the beauty-products company said it lost money in the first quarter of fiscal 2019 due to supply disruptions.

Shares of Dish Network Corp. DISH, +0.64% are down 3.6% in premarket action, after the pay-tv firm missed analyst revenue estimates and reported a decline in subscribers in the quarter ended Sept. 2018.

Shares of Scotts Miracle-Gro Co. SMG, +1.59% are down 5.5% before the bell Wednesday, after the lawn-and-garden-care company fell short of profit and sales estimates for the fiscal fourth quarter.

Office Depot Inc. ODP, +12.36% stock popped 10.6% before the bell, after the company announced revenue and sales figures Wednesday morning that beat analysts’ third-quarter estimates. The office goods retailer also raised its full year guidance for 2018.

What are strategists saying?

“At the margin, the outcome of the midterm elections in the U.S. will be to hinder further fiscal easing, increasing the likelihood that the economic cycle is peaking, but leave the president free to continue his trade policies,” said Kit Juckes, global macro strategist at Société Générale, in a note.

“Due to investors not being on high alert that a period of political uncertainty could be upon us, investors are reasonably happy to consider repurchasing stocks in their portfolios,” said Jameel Ahmad, global head of currency strategy & market research at FXTM.

How are other markets trading?

European stocks SXXP, +1.04% pushed higher across the board, while in Asia, stocks closed on a mixed note.

The greenback has seen some of the biggest moves in the wake of midterms, with the ICE Dollar Index DXY, -0.36% slumping 0.6% to 95.79. The yield on the 10-year Treasury note TMUBMUSD10Y, -0.66% fell 3 basis points to 3.179%, after hitting its highest since Oct. 10 on Tuesday.

Oil prices CLZ8, +0.51% are up 1%, as gold futures GCZ8, +0.17% rose 0.6%.

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