Markets after the Democratic sweep: solar stocks soar, defense and Musk shares slide

Markets turned their attention on Wednesday from who won the US midterm elections to what a Democratic Congress could mean for individual industries, Reuters reported.

Recovery after an overnight drop

US stock futures fell by as much as 2% overnight, then reversed to trade about 1% higher. Europe’s STOXX 600 rose about 1.4% to a two-month high, with eurozone banks up nearly 4%. The dollar weakened, Treasuries rallied and the Mexican peso strengthened. Ukraine’s international bonds hit their highest level since September.

Winners

• Clean energy: First Solar rose 9.4% before the open, Sunrun 10% and Enphase 7.6%; in Europe Orsted gained about 7% and Vestas about 5%. Investors expect federal support for renewables to stay in place.
• Health care: insurers Centene (+4.5%) and Molina (+6%) and hospital operator HCA (+3.7%) rose.

Losers

• Defense: Northrop Grumman fell about 5%, and RTX, Lockheed Martin and L3Harris lost more than 3% each, on expectations that the $1.5 trillion defense budget request may face cuts. BAE Systems fell nearly 4% in London.
• Musk and Trump companies: Tesla and SpaceX fell between roughly 3% and 5%; XTB’s Kathleen Brooks said extra scrutiny could slow their planned merger. Trump Media dropped 7%.
• Data centers: Core Scientific fell 2.8% amid expectations of more congressional hearings into the AI build-out, although analysts doubt legislation could meaningfully stall construction.