MSX Research said U.S. equities opened higher in the first trading session after the midterm elections, even though Washington is heading back toward divided government. In the firm’s view, traders first priced in the removal of election uncertainty and the idea that a split government could curb large fiscal packages and major policy swings.
Democrats won control of both the Senate and the House, ending simultaneous Republican control of the White House and Congress. With Donald Trump still serving as president, the U.S. is set to enter a period of divided government from early 2027, with Democrats controlling Congress and Republicans holding the White House.
Indexes, yields and oil all moved sharply
On Nov. 4, the Dow Jones Industrial Average rose 3.03%, or 1,569.40 points, to 53,356.12. The S&P 500 gained 1.58% to 7,688.62, the Nasdaq advanced 1.44% to 25,736.51, and the Russell 2000 added about 1.6%, with small caps rebounding as well.
In rates, the 10-year U.S. Treasury yield fell about 6.6 basis points to 4.88%, which MSX linked to expectations that divided government may restrain fiscal spending. Brent crude fell about 8.7% to $94.62 a barrel.
Winners and losers split by policy exposure
MSX said the broad rise in indexes did not mean every sector benefited. Healthcare services, clean energy and some rate-sensitive assets led on the first day, while oil, defense and companies closely tied to Trump and Elon Musk came under pressure.
Among gainers, HCA Healthcare rose 10.3% and stood out in healthcare services. First Solar gained 4.6% and Enphase Energy rose 3.7%, moves MSX said reflected support from policy expectations around clean energy.
Among decliners, Exxon Mobil fell 4.6% and ConocoPhillips dropped 5.2% as oil stocks tracked the fall in crude. Lockheed Martin lost 6.9%, Northrop Grumman fell 4.5%, and General Dynamics declined 2.6%. Trump Media dropped 24.5%, making it one of the day’s sharpest losers among politically linked assets. Tesla fell 3.3% and SpaceX lost 3.8%.
AI-related names did not move in one direction. AMD rose about 1% after giving a stronger growth outlook, which MSX said showed the market was not dismissing AI demand.
MSX breaks the reaction into three main themes
The first theme was healthcare services. MSX said Democrats have put restoring Affordable Care Act subsidies and cutting back or delaying previously approved Medicaid spending reductions on the agenda after regaining control of Congress. Hospital operators rely heavily on commercial insurance, Medicare and Medicaid payments, so the market moved quickly to raise revenue visibility for those companies.
HCA Healthcare’s 10.3% gain reflected expectations that hospitals may face less Medicaid reimbursement pressure going forward. MSX added that this remains a policy expectation, not a completed shift. Trump still controls the White House, and any Democratic effort to reverse existing healthcare cuts would still face the risk of a presidential veto, budget negotiations and internal party differences.
The second theme was clean energy. Gains in First Solar and Enphase suggested investors expect stronger protection for clean-energy tax credits, federal funding and project approvals under a Democratic Congress. MSX said Congress could also use budget authority, hearings and oversight powers to limit changes by the executive branch to some new-energy policies.
The third theme covered oil, defense and politically linked assets. MSX said the near-9% one-day drop in Brent crude was the direct reason energy stocks fell. The market also sees a Democratic Congress as more likely to increase oversight of the Iran war and raise the odds of pushing for ceasefire talks. The logic for defense stocks was similar. MSX said Democrats, by controlling Congress, can influence military spending and war policy through budget approvals, hearings and investigations, though foreign policy and military decisions are still led mainly by the president and the executive branch. In that reading, the declines in Lockheed Martin and Northrop Grumman looked more like a style rotation.
Political-risk repricing and a selective AI trade
MSX said the declines in Trump Media, Tesla and SpaceX reflected a fresh assessment of political ties and regulatory risk. A Democratic Congress has investigative, subpoena and hearing powers, which could increase scrutiny of Trump’s business interests, government contracts and Musk-controlled companies. Even so, MSX noted that orders, revenue and product competitiveness at those companies did not change immediately because of a single election, and later performance should still return to company fundamentals.
MSX also argued that the AI supply chain should be viewed selectively. Democratic control of Congress could bring more scrutiny to data-center power use, construction permits, antitrust issues, AI safety and platform liability. That leaves data-center projects with high capital spending and heavy policy dependence facing greater uncertainty. Still, the Nasdaq rose 1.44% on the day and AMD advanced on its outlook, which MSX said indicates the market is not rejecting AI demand but is instead separating companies with earnings already delivered from those relying mainly on long-dated expectations.
What MSX is watching next
From a broader market perspective, MSX said the short-term boost from the election came mainly from lower uncertainty, falling Treasury yields and weaker oil prices, not from any immediate ability of Congress to launch new economic policy. Divided government may limit extreme policy changes and reduce the odds of large fiscal expansion. At the same time, it may raise the risk of budget deadlock, a government shutdown and debt-ceiling negotiations. For U.S. equities, MSX said the next two years may bring fewer policy changes but more political bargaining.
The firm said investors should now watch whether Democrats can form executable policy in healthcare budgets, clean-energy appropriations, defense spending and AI regulation, while also tracking whether oil prices and Treasury yields hold their post-election direction.
About MSX
The article describes MSX as an RWA trading platform focused on access to global financial markets. It said the platform offers spot and derivatives trading in nearly 400 tokenized stocks and Pre-IPO assets, and has built a broader digital finance offering that includes U.S. stock spot products, perpetual contracts, crypto-to-crypto trading, Pre-IPO products and research services.
MSX added a risk notice at the end of the report, saying macroeconomic conditions and the U.S. stock market can be highly volatile, and that the material is for academic and research observation by the Maitong Research Institute only and does not constitute investment advice.
