Markets Cheer Gridlock: Dow Jumps 1,100 Points as Investors Price In a Split Washington

Wall Street’s first reaction to a Democratic sweep was not fear — it was a rally. The Dow Jones Industrial Average rose more than 1,100 points in Wednesday morning trading as investors absorbed the result.

The logic is an old one: divided government means fewer surprises. A Democratic Congress checking a Republican White House makes major new taxes, major new spending, and abrupt regulatory swings all less likely — and markets will pay a premium for predictability, whatever voters think of it.

For readers following our chip coverage: AMD reported third-quarter results after Tuesday’s close, the latest test of whether Intel’s warning about a PC slowdown is an industry problem or a company problem. Between the chip numbers, fuel prices tied to the Iran war, and a lame-duck spending fight in December, the economy — not the recounts — will decide whether this rally lasts past the week.

The conservative take: A one-day rally is not an economy. Working families judge by rent, groceries and gas, and those numbers — not the Dow — are what Republicans have to answer for, and what Democrats now co-own.

Sources: USA Today’s live coverage