The Washington consensus is that the Capitol Hill is about to enter a state of gridlock, with little legislation passing anytime soon.

Wall Street, however, sees potential for some compromise on the horizon -- although not necessarily the kind of grand bargains around affordability and fiscal issues that would be needed to lift the market as a whole -- or to counteract the downward drag brought on by fears that the data-center buildout will slow.

The S&P 500 rose 1.6% on the day after the election, with sectors that would benefit from legislation around healthcare and green energy leading the charge. The index then whipsawed, plummeting more than 4% on Thursday as tech and artificial-intelligence-related stocks sold off. The Dow dropped 3.4% and the Nasdaq fell nearly 6%.

After months of lawsuits and threats related to contesting voter rolls and election results from the White House, investors on Wednesday may have felt relieved that the election went off without a hitch. President Donald Trump accepted the results on Tuesday without protest.

"I think we will work with the Democrats, and we will get along very well with them," he told The Wall Street Journal after the election outcome became clear.

Investors also saw room for Democrats to pressure Trump to strike deals with them on Medicaid funding, clean-energy credits, and other issues that might help the returns of certain stocks.

Historically, Trump has shown a willingness to buck his party's traditional policy stances and strike deals with unlikely parties if he detects the issue will be popular with voters. That, and the overwhelming mandate Democrats won, led some to believe that compromises might actually be possible.

"I have been telling my clients 'beware of the economic populists,' " says Nathan Dean, a Bloomberg Intelligence senior government analyst. "There are alliances out there on Capitol Hill that generally wouldn't be considered customary."

Trump will need to work with Democrats on a few pieces of must-pass legislation, such as government funding bills and a bill to raise the debt ceiling, which the Treasury is on track to hit early next year. Messy debt-ceiling negotiations between a Democratic Congress and Trump have broadly been seen as negative for the bond market.

But Pimco's head of public policy, Libby Cantrill, wrote in a research note on Wednesday that it could just as likely be that the debt ceiling fight "isn't a volatility event at all as Democrats and Trump are able to find common ground on more spending." Cantrill also wrote that Trump might accept more healthcare spending in exchange for additional Pentagon funding.

In return for passing funding-related bills, Democrats will probably request that Trump walk back some of the spending cuts Congress made last year as part of his signature tax and spending legislation.

That includes trying to get Trump to reverse restrictions on Medicaid. The tax and spending package included new work requirements for Medicaid, limits on state financing, and caps on some payments through Medicaid managed-care plans. Democrats' newfound power might at least delay those cuts, increasing Medicaid enrollment for healthcare firms and payments to hospital providers.

Shares of Medicaid-focused healthcare firms and hospital providers, including Centene, HCA Healthcare, and Tenet Healthcare, soared more than 8% on the day after the election. All held on to their gains throughout the week as other sectors sold off.

Democrats might also seek to extend renewable-energy credits for solar and wind projects. Trump might not sign off on that. But, if nothing else, the Democratic victory removes the risk that Congress would further repeal the credits passed under President Joe Biden's Inflation Reduction Act.

Green-energy stocks including First Solar, Sunrun, and Enphase Energy rose sharply on Wednesday. By Friday, Sunrun, a residential solar company, was up nearly 22% and First Solar, a solar manufacturer, was up roughly 9% from their pre-election-result prices. Enphase, which creates equipment for AI data centers, was still up but more modestly.

There are other issues that Trump and Democrats could tackle in the attempt to address the cost-of-living issues that Americans consistently said were the most important factor in determining their votes. Potential solutions include a cap on credit-card interest rates, according to Brian Gardner, Stifel's chief Washington policy strategist.

Trump called for a 10% cap on credit-card interest rates earlier this year, and Sens. Bernie Sanders (I., Vt.) and Josh Hawley (R., Mo.) have co-sponsored legislation that would do just that. Another bill around credit cards with bipartisan support is the Credit Card Competition Act, which is aimed at lowering the swipe fees that merchants pay to card networks, though both co-sponsors of that bill are leaving the Senate next year.

Investors banking on a surprise spate of bipartisanship to address broader affordability concerns are likely to be disappointed.

"Despite [Trump's] rhetoric that he expects to do deals with Democrats, such deals will likely be limited to must-pass measures, such as annual appropriations," says Beacon Policy Advisors managing partner Stephen Myrow.

Trump repeatedly touted the "power of veto" in an appearance on Fox News on Wednesday. If the Democrats put "insane things" on his desk, he said, "I'll veto them."

Most Democrat-sponsored bills, however, won't even make it to the president's desk. Democrats won their Senate majority by flipping seats in red-leaning states like Texas, Iowa, Ohio, Kansas, and South Carolina. That could make the party more amenable to centrist policies, but the GOP lawmakers who retained their seats are among the most loyal to Trump and unlikely to brook a compromise without his approval.

And Democrats are poised to use much of 2027 pursuing investigations and even a potential impeachment trial against Trump and members of his cabinet. They will also call hearings on business executives who have donated to or worked with the Trump White House over the past two years. All of that might sour Trump's appetite for bipartisanship.

Myrow believes all of that is reason to doubt Wall Street's early optimism on deals. "Investors are, for the most part, getting ahead of themselves," he says.

The White House didn't respond to a request for comment.

But, speaking to the Journal on Wednesday, Trump caveated his conciliatory remark about compromising with Democrats. If the White House isn't getting along with the next Congress, "we will be very tough on them," he said. "They will be very tough on us."