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The Dow Jones Industrial Average projected a triple-digit gain in pre-market trading after Tuesday night's midterm elections granted control of the U.S. House of Representatives to the Democratic Party for the first time since 2011. Propelled into the House majority by historic voter turnout, Democrats are expected to act as a significant check on Republican President Donald Trump's agenda for the remaining two years of his first term.
Senate Republicans held their ground in the Senate and gained at least two seats in the upper chamber. Combined with control of the executive branch under President Trump, Republicans will retain significant sway over national policy and potential judicial appointments. Regardless of policy direction, the new split in the nation's legislative branch is sure to cause political gridlock in Washington for the foreseeable future.
Here are the numbers from Tuesday for the Dow, S&P 500, and Nasdaq:
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Now, here's a closer look at today's Money Morning insight, the most important market events, and stocks to watch.
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The Top Stock Market Stories for Wednesday
- Following yesterday's elections, Nancy Pelosi will return to the role of Speaker of the House, while Maxine Waters will take over as chair of the House Financial Services Committee in January. History has shown that markets perform well in situations where both parties split power between the two chambers of Congress.
- While markets react to the midterms, pay close attention to the start of today's Fed Open Market Committee meeting. Leaders from the central bank will gather to discuss monetary policy and expectations for the economy in the year ahead. The central bank is next expected to raise interest rates in November; however, stronger job growth and improving GDP growth could move the Fed to raise rates for the fourth time this year during their December meeting. Markets expect additional rate hikes in 2019.
- Mortgage applications are at a four-year low, while interest rates are sitting at an eight-year high. The Mortgage Bankers Association said that weekly mortgage applications fell by 4% week over week, but 16% from the same time last year. The combination of lower housing supply and rising interest rates has been a major deterrent for home buyers, particularly younger Americans looking for their first home.
Three Stocks to Watch Today: CAT, AMZN, HUM
- Shares of Caterpillar Inc. (NYSE: CAT) rallied Wednesday morning in the wake of last night's election results. The stock is benefiting from two potential catalysts that would drive the stock higher. First, investors are hoping that President Trump will work with Democrats on a $1 trillion infrastructure deal. Second, Democrats could press on President Trump to resolve the ongoing trade conflict with China and reduce the negative impact on farm communities and other industries across the country.
- Shares of Amazon.com Inc. (NASDAQ: AMZN) and other big tech stocks rallied this morning thanks to Democrats' victory in the House. Investors believe that Democratic control in the lower chamber will hinder President Trump's call to explore whether Amazon is too big and if the e-commerce giant should be broken up over antitrust concerns.
- A busy day of earnings is headlined by Humana Inc. (NYSE: HUM). The health insurance giant's stock rose 1.8% after the firm reported earnings per share of $4.58. That figure easily topped expectations of $4.26. The firm also reported stronger revenue and hiked its full-year outlook. The company said that its Medicare Advantage business continues to bolster its bottom line.
- Look for earnings reports from 21st Century Fox Inc. (NASDAQ: FOXA), Ctrip.com International Ltd. (NASDAQ: CTRP), Dean Foods Co. (NYSE: DF), Groupon Inc. (NASDAQ: GRPN), Keurig Dr Pepper Inc. (NYSE: KDP), Michael Kors Holdings Ltd. (NYSE: KORS), Square Inc. (NYSE: SQ), TripAdvisor Inc. (NASDAQ: TRIP), and Wynn Resorts Ltd. (NASDAQ: WYNN).
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.
Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.