Dow, S&P 500 rise to record finishes; Nasdaq slides

U.S. stocks mostly rose Wednesday, taking benchmarks to historical peaks, a day after elections had Republicans taking control of the Senate and as a report on the jobs market came in better than anticipated.

"The takeover of the Senate was a little bit of a surprise, but not a big surprise. Investors are asking themselves, does this mean there will be any impact on the economy and earnings, and the answer to that question is probably not," said Hugh Johnson, chairman of Hugh Johnson Advisors.

Republicans gained at least seven seats in the Senate, leaving the chamber's leader, Mitch McConnell, to control the legislative agenda for the last two years of Barack Obama's presidency.

"Congress will pass some bills I can not sign; I'm pretty sure I'll take some actions that Congress won't like," Obama told a nationally televised news conference. But, "we all agree on the need to create more jobs that pay well," the president said in vowing to work with Republicans.

Historically, midterm elections come along with healthy equity returns, as investors embrace the certainty, at least in the short term, the results bring.

The CBOE Volatility Index, a measure of investor uncertainty, declined 4.8 percent to 14.17.

"There are some smaller issues that are important, such as the Federal Reserve's independence, trade negotiations, and fiscal policy, or spending, but I don't think they're going to be sufficient enough to change the forecast for the economy and earnings," said Johnson of the electoral ramifications.


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The Dow Jones Industrial Average rose 101 points to an intraday record, and ended up 100.69 points, or 17,484.53, an all-time closing high, with Visa pacing blue-chip gains that extended to 25 of 30 components.

The S&P 500 added 11.47 points, or 0.6 percent, to 2,023.57, a record close, with utilities and energy advancing the most and health care the laggard among its 10 major sectors.

"Techland earnings issues and profit-taking in biotechs are keeping the Composites in check while the rebound in the oil sector is supporting the S&P," Elliot Spar, market strategist at Stifel, Nicolaus noted in afternoon commentary.

After fluctuating between gains and losses, the Nasdaq shed 2.91 points, or nearly 0.1 percent, to 4,620.72.

For every two shares falling, roughly three rose on the New York Stock Exchange, where nearly 797 million shares traded. Composite volume approached 3.8 billion.

Traders work on the floor of the New York Stock Exchange, Oct. 29, 2014.
Lucas Jackson | Reuters
Traders work on the floor of the New York Stock Exchange, Oct. 29, 2014.

Bouncing back from a multi-year low after U.S. inventories rose less than predicted, crude futures rose $1.49 to $78.68 a barrel, while gold futures dropped $22.00 to $1,145.70 an ounce on the New York Mercantile Exchange.

The U.S. dollar gained against the currencies of major U.S. trading partners, and the yield on the 10-year Treasury note used to figure mortgage rates and other consumer loans rose to 2.3391 percent.

Private employers added 230,000 jobs last month, more than estimated and the largest gain since June, according to the ADP National Employment report, which casts a positive light on the labor front two days before the payrolls report.

"The report is strong enough to maintain the view that the labor market is recovering into the final quarter, and is likely to provide optimism among investors ahead of Friday's official government employment report," Andrew Wilkinson, chief market analyst at Interactive Brokers, noted in emailed commentary.

Reports on the services sector were less positive, coming in below expectations, with one compiled by the information-services company Markit falling to 57.1 in October from 58.9 the month before, while the Institute for Supply Management's gauge declined to 57.1 last month from 58.6 in September.

"Growth has slowed somewhat, but not by a significant amount, but it's taking a little starch out of the early rise," said Peter Cardiillo, chief market economist at Rockwell Global Capital.

"This rally will continue, but at a slower pace. Fundamentals continue to improve, earnings season is winding down, so it's all about the economy and the debate of when the Fed will change monetary policy, so the euphoria in the market is going to lessen a bit," said Cardillo.

On Tuesday, U.S. stocks mainly declined, a day after benchmarks rose to records, as the price of oil slid to a three-year low and Americans cast ballots in midterm elections.

Read More Stocks end mostly lower as oil drops, ballots cast

Coming Up This Week:

Thursday

Earnings: Disney, AstraZeneca, Siemens, AOL, AMC Networks, Molson Coors Brewing, Advance Auto Parts, First Solar, Cablevision, Echostar, Henry Schein, Apache, Scripps Networks, Wendy's El Pollo Loco, Lionsgate, Zynga, Biocryst Pharma, Cablevision, Enbraer, Calpine, Windstream, Con Ed, Tekmira

European Central Bank meets

Monthly chain store sales

8:30 a.m.: Initial claims

8:30 a.m.: Productivity and costs

10:40 a.m.: Chicago Fed's Evans

7:05 p.m.:Cleveland Fed President Loretta Mester

Friday

Earnings: Berkshire Hathaway, Allianz, Nippon Telegraph, ArcelorMittal, Humana

8:30 a.m.: Employment report

9:15 a.m.: Chicago Fed's Evans

10:15 a.m.: Fed Chair Janet Yellen on policy in Paris

1:00 p.m.: Chicago Fed's Evans

2:30 p.m.: Fed Vice Chair Daniel Tarullo

3:00 p.m.: Consumer credit

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