Dow Jumps 1,500 Points on Democratic Win: Is Gridlock Priced In?

The Dow Jones Industrial Average rose about 1,500 points on Wednesday after Democrats won Congress, with investors betting that divided government will make it harder to pass large tax or spending bills and limit policy shocks. Brent crude futures fell more than 8%, supporting expectations of cooling inflation. Analysts also flagged risks: the U.S. will face a fight over the legal borrowing cap next year, and Asian technology shares fell during Wednesday trading, with South Korea’s Kospi down 1.17% and Taiwan’s Taiex down 2.3%. Charu Chanana of Saxo said gridlock need not hurt corporate earnings, while Tai Hui of J.P. Morgan Asset Management highlighted the debt-ceiling risk and Michael Arone of State Street warned about investor overreaction.