Wall St surges on relief after midterms; tech, healthcare rally

US stocks surged on Wednesday as investors piled into technology and healthcare sectors after midterm elections led to a divided Congress and fueled bets that tighter regulations in these sectors would be harder to push through.

Democrats won control of the House of Representatives on Tuesday, while President Donald Trump’s Republicans expanded their majority in the Senate as expected, pointing to a political gridlock in Washington.

The S&P technology sector rose 2.4 percent, while the healthcare group gained 2.8 percent as fears of stricter regulations curbing their growth eased.

Health insurers Humana, Anthem and UnitedHealth Group jumped to record highs as voters in three states approved expanding Medicaid programs for low-income people.

Large technology and internet names, including Facebook, Netflix, Amazon and Alphabet, also gained.

“The uncertainty around the midterms is over, so the markets are rallying...we’re not expecting any major policy implications over the next two years,” said Massud Ghaussy, senior analyst at Nasdaq IR Intelligence in New York.

“Certain sectors will benefit or stand to lose based on compromise reached between the House and the White House, but the overall market impact will be limited.”

While a divided Congress will hamper Trump’s political and economic agenda, few expect a reversal of corporate tax cuts and deregulation measures that have already been enacted, allowing investors to buy back into a market recovering from its worst month in seven years in October.

At 12:39 p.m. ET the Dow Jones Industrial Average was up 345.06 points, or 1.35 percent, at 25,980.07, the S&P 500 was up 41.25 points, or 1.50 percent, at 2,796.70 and the Nasdaq Composite was up 152.03 points, or 2.06 percent, at 7,528.00.

Following a steep selloff in October, the S&P 500 remains down roughly 5 percent from its record high, as investors fear that rising interest rates and trade wars could take a toll on stocks.

The Federal Reserve starts its two-day monetary policy meeting on Wednesday, but is not expected to raise rates until December. Financial stocks gained 0.3 percent and bank stocks were trading flat as Treasury yields slipped.