Wall Street moved mixed on Friday after the Democratic Party’s major win in the US midterm elections. Technology shares fell on speculation that a Democratic Congress could curb AI investment, while US Treasury bonds rallied and pushed the 10-year yield near 4.8 percent. The S&P 500 still gained 23.13 points, or 0.31 percent, to close at 7,376.86.
Investors weigh a divided government
Democrats won a major victory in the midterms, leaving the Trump administration politically divided. Investors read that as limiting Trump’s room to pass major tax and spending legislation. The same division could also slow AI investment, which in turn could ease inflation pressure. Oil prices fell on speculation that a Republican defeat would hasten the end of the Iran war.
The Dow Jones Industrial Average fell 237.33 points, or 0.46 percent, to 51,285.73. The Nasdaq Composite rose 1.09 percent to 24,579.42.
Bond rally nears a month
The Treasury rally had lasted nearly a month, and the 10-year yield was more than 0.5 percentage points below its early-October high. Scott DiMaggio, head of fixed income at AllianceBernstein, said AI had become the largest contributor to nominal GDP, so any obstacle was likely to help the bond market.
John Briggs, head of US interest rate strategy at Natixis North America, warned that the rally had moved too fast. He said it should be watched if stock markets do not return to sharp selling pressure. Neil Sutherland, a portfolio manager at Schroder Investment Management, said several factors weighing on the market would pass within six to 12 months, which would support bonds.
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Inflation and auctions ahead
US inflation remains well above the 2 percent target, and the Fed is expected to raise rates next month. October CPI data was due Tuesday. Annual inflation figures will not be available because of the earlier government shutdown. The Treasury sells 3-year debt on Monday, 10-year debt on Tuesday and 30-year debt on Thursday.
Data: S&P Dow Jones Indices · U.S. Department of the Treasury
