Dow Surges After Midterms; Economists See Little Immediate Relief for Households
By Jacqueline Policastro | Quincy News Correspondent
Click here for updates on this story
Washington (Quincy News) — Stocks rallied and Treasury yields fell Wednesday after Democrats won control of Congress, as investors bet a divided government would limit major changes to economic policy.
Economists interviewed by Quincy News cautioned that the election offers no quick fix for high prices. Both see a case for the Federal Reserve to raise interest rates in December, potentially extending the pressure on borrowers.
The Dow climbed about 1,500 points, or 3.09%, by mid-afternoon Wednesday. The S&P 500 gained 1.8% and the Nasdaq Composite rose 1.9%.
The benchmark 10-year Treasury yield fell to about 4.92% earlier in the morning, while the dollar weakened.
Solar shares advanced, while some chipmakers and companies tied to data centers fell on concerns about greater scrutiny of artificial intelligence development.
Wall Street gains do not reach everyone
David Kass, a clinical professor of finance at the University of Maryland’s Robert H. Smith School of Business, said investors welcomed the decisive election outcome and the prospect of fewer sweeping policy changes.
“It removes uncertainty,” Kass told Quincy News.
He expects investors to return their attention to corporate earnings and interest rates, which he considers the main drivers of stock prices. He does not expect the election itself to significantly change either in the short term.
For households, the benefits of a rally are uneven. People with stocks, including workplace retirement accounts, can gain wealth as markets rise. Those without investments remain focused on grocery bills, gasoline prices and whether their paychecks cover their expenses, Kass said.
“The issue of affordability is a major issue and I think it was a major voting issue,” he said.
Kass said both parties face pressure to deliver results before the 2028 election. Democrats will control Congress, but President Donald Trump can block legislation with his veto.
He also sees a possible benefit for technology shareholders if greater scrutiny slows AI data-center construction. Companies spending heavily on infrastructure could borrow less and retain more cash, easing some investors’ concerns about the cost of expansion.
On interest rates, Kass expects the Fed to raise its benchmark rate by a quarter of a percentage point in December, depending on the economic reports released before the meeting.
“I think there’s sufficient justification for raising rates, a quarter of a point in December,” he said.
Kass said Fed Chair Kevin Warsh needs to establish his credibility by making decisions in the country’s economic interest despite political pressure over borrowing costs.
Congress cannot deliver an overnight fix
David Mitchell, a professor of economics and director of the Bureau of Economic Research at Missouri State University, said the election changes who writes economic policy, but not how quickly that policy takes effect.
Mitchell, who provided economic forecasts to the Federal Reserve Bank of Kansas City for a decade through 2019, drew a distinction between Congress’ power to shape the economy through legislation and the Fed’s influence on borrowing costs.
Congress sets “the rules of the game,” he told Quincy News. He added that changes to those rules can take years to affect businesses and households and that lawmakers taking office in January cannot quickly reverse the financial pressures voters face.
Divided government could encourage compromise, he said, adding, “You have to have some kind of compromise if you want to have anything passed.”
Mitchell also favors a December rate increase, though he is uncertain whether policymakers will act.
He said inflation becomes harder to control once households and businesses expect prices to keep rising. Those expectations influence wage demands and other economic decisions, prolonging the problem.
“You can’t just flip a switch and turn it off,” he said.
For Mitchell, persistent inflation carries a political cost as well as a financial one.
“Inflation erodes trust in government and social institutions,” he said.
The Fed meets next on Dec. 8 and 9, with an interest-rate decision and updated economic projections due on Dec. 9.
Please note: This story was provided to CNN Wire by an affiliate and does not contain original CNN reporting. This content carries a strict local market embargo. If you share the same market as the contributor of this article, you may not use it on any platform.

