Stocks jump on gridlock hopes

Gridlock looked sweet to Wall Street Wednesday . Stocks surged as investors bet that a tight race for the White House could end with a split government - Democrats in the White House and the House of representatives - with the GOP in charge of the Senate.

A divided Congress lowers the odds of higher antitrust scrutiny or a hike in capital gains taxes.

Sam Stovall of CFRA Research:

"The market is responding favorably to the Blue Wave morphing into more of a Blue Ripple, whoever even if we do get a Democratic president, because the Senate will likely stay Republican. That'll offer pushback as to increased regulation and higher taxes - all of which was focussed more on technology and communications services."

The Nasdaq, loaded with tech stocks, leapt the most, up nearly 4%. The S&P 500 shot up more than 2%. And the industrials-heavy Dow rose 1.3%.

But because gridlock could lessen the possibility of a big stimulus package and by extension, infrastructure spending, shares of industrials and materials like Caterpillar and Dow fell.

Investors scooped up shares of drug makers Pfizer, Merck and Johnson & Johnson on hopes that a split Congress would likely shield the industry from sweeping reform.