US stocks jumped on Wednesday after Democrats won control of both chambers of Congress in a seismic midterm election, paving the way for a divided government.

The Dow Jones Industrial Average (^DJI) rose 2.5%, or around 1,300 points, while the S&P 500 (^GSPC) climbed 1.5%. The Nasdaq Composite (^IXIC) traded up by 1.6% as Apple (AAPL) and Microsoft (MSFT) stocks touched record highs.

Markets swiftly repriced a Democratic sweep of the House and Senate — and the potential for ballot measures and newly elected officials to restrict data center construction. Chip stocks, including Nvidia (NVDA) and Micron (MU), fell more than 1%. Meanwhile, other parts of the tech sector offset some of those losses with Apple (AAPL) and Microsoft (MSFT) each hitting all-time highs.

Investors will also be watching for policy actions on housing and pharmaceuticals in the aftermath of the election.

As Yahoo Finance's Jared Blikre pointed out on Tuesday, midterm elections have a history of shaping stock performance in the near term but don't tend to move markets much over the long term.

On the economic front, ISM and S&P data showed that US services activity expanded at a slower pace in October as businesses continued to grapple with elevated costs. Private-sector hiring, meanwhile, continued to show strength in October as an ADP report indicated "pretty solid job growth."

Earnings continue to roll in. AMD ( AMD ) posted a Q3 earnings beat , while McDonald's ( MCD ) grappled with slowing same-store sales growth. Duolingo (DUOL) stock soared over 30% on strong user growth.