Finance1 min read

What was really behind Wednesday's monster rally? Trump quickly making peace

By · Published by Everything Blog

In short

The S&P 500 gained over 1% on Wednesday after Trump confirmed his acceptance of the midterm results to major news outlets overnight. Market participants had grown increasingly anxious about potential election challenges following a recent Department of Justice lawsuit in Alaska. While strategists suggest the index could touch 8,000 by year-end under a collaborative administration, analysts caution that persistent Middle East energy disruptions and unpredictable presidential rhetoric could still disrupt momentum.

Key points

  • Prompt political concessions from the White House effectively lowered risk premia by remo…: Prompt political concessions from the White House effectively lowered risk premia by removing fears of contested election outcomes.
  • Market strategists believe the S&P 500 could reach 8,000 by year-end if a cooperative pol…: Market strategists believe the S&P 500 could reach 8,000 by year-end if a cooperative political climate persists.
  • External challenges such as Middle East energy disruptions and potential White House rhet…: External challenges such as Middle East energy disruptions and potential White House rhetoric could still bring volatility back to stocks.

Sources checked by our analysis pipeline: 1

The stock market skyrocketed on Wednesday on the heels of a decisive sweep for Democrats in the 2026 midterm elections. But that was not necessarily the only driver of the climb.

"President Trump's acknowledgement of the Democrats' victory in the midterms and his expressed openness to collaborating with the opposition have helped markets to rally on hopes that contestation of the results and more adverse polarization can be avoided," said Thomas Hempell, Generali Investments senior economist.

Trump told The New York Times and The Wall Street Journal overnight Tuesday that he accepted the results and would work with Democrats. Those headlines coincided with a rebound in stock market futures.

In the lead-up to this year's midterms, some on Wall Street grew increasingly concerned about the prospect of Trump contesting the election results. The Department of Justice's Alaska election lawsuit led to fears over delays with the outcome that would exacerbate the uneasiness in the market that's typically removed once the elections conclude.

CNBC's Fed Survey showed that among 30 fund managers, strategists and economists, 63% believe that the extended uncertainty…

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