By Hilary Russ and Rodrigo Campos
NEW YORK (Reuters) - Most major stock markets rose on Wednesday after the U.S. midterm election divided control of Congress, while expectations of political gridlock in Washington weighed on the dollar.
U.S. oil prices slipped after U.S. crude output hit another record high.
While gridlock could hamper President Donald Trump's political and economic agenda, few analysts expect a reversal of tax cuts and financial deregulation measures that have already been enacted.
That view helped all three Wall Street equity indices rally, with traders piling into technology and healthcare stocks. [.N]
"I think it is more just relief that the election has come and gone, no surprises, no tail-risk outcome occurred. Gridlock is fine, let's get on with things and worry about the fundamental issues like earnings, the (Federal Reserve)," said David Joy, chief market strategist at Ameriprise Financial in Boston.
Still, a split Congress could hamper Trump's push for a further round of tax cuts and deregulation, measures that have supercharged the U.S. economy, stock markets and the dollar.
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The Dow Jones Industrial Average rose 423.38 points, or 1.65 percent, to 26,058.39, the S&P 500 gained 43.11 points, or 1.56 percent, to 2,798.56 and the Nasdaq Composite added 152.67 points, or 2.07 percent, to 7,528.63.
The pan-European STOXX 600 index <.STOXX> rose 1.06 percent and MSCI's gauge of stocks across the globe gained 0.43 percent.
The U.S. Federal Reserve starts its two-day monetary policy meeting on Wednesday, and it is expected to keep interest rates unchanged. A rate hike in December is largely priced in.
"The policy path implied by this outcome shifts the narrative away from rising rates at least temporarily," Morgan Stanley's Michael Zezas wrote in a client note.
That view pushed the dollar lower against a basket of currencies. The dollar index fell 0.31 percent, with the euro up 0.24 percent to $1.1453.
U.S. Treasury yields fell, but cut their decline after a record high amount of 30-year government bonds was met with weak demand.
Benchmark 10-year notes last rose 3/32 in price to yield 3.2022 percent, from 3.215 percent late on Tuesday.
Attention will now focus on Trump's hard line on trade tariffs, which he can impose without congressional approval. That keeps alive worries about a trade war between China and the United States.
Chinese shares closed 0.7 percent lower, while Hong Kong stocks ended up 0.1 percent. [EMRG/FRX]
Emerging market stocks lost 0.01 percent. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.51 percent higher, while Japan's Nikkei <.N225> lost 0.28 percent.
The dollar's weakness lifted other currencies. The Japanese yen strengthened 0.04 percent versus the greenback at 113.40 per dollar, while sterling was last at $1.3138, up 0.31 percent on the day.
The Mexican peso rose overnight as the U.S. election results showed a Democratic majority in the House, but later fell as traders cashed in following four sessions of gains.
The Mexican peso lost 0.84 percent versus the U.S. dollar, recently trading at 19.89.
U.S. oil prices continued a recent slide after domestic inventories rose more than expected, adding to over-supply concerns as U.S. crude output hit another record high. [O/R]
U.S. crude fell 0.56 percent to $61.86 per barrel and Brent was last at $72.24, up 0.15 percent on the day.
Spot gold added 0.1 percent to $1,227.22 an ounce, having earlier hit a high of $1,235.83, while U.S. gold futures settled up $2.40, or 0.20 percent, at $1,228.70.
(Additional reporting by Sruthi Shankar and Noel Randewich in San Fransisco; Kate Duguid, David Gaffen and Richard Leong in New York; Sujata Rao in London;; Editing by Dan Grebler)