Stocks jump as Wall Street thinks tight U.S. election means gridlock
U.S. stocks surged to close higher on Wednesday as the presidential election race remained cloudy but the likelihood of gridlock in Congress made investors optimistic that major policy changes would be difficult to enact.
The Dow Jones Industrial Average .DJI rose 367.63 points, or 1.34%, to 27,847.66, the S&P 500 .SPX gained 74.28 points, or 2.20%, to 3,443.44 and the Nasdaq Composite .IXIC added 430.21 points, or 3.85%, to 11,590.78.
Both President Donald Trump and Democratic nominee Joe Biden still had paths to reach the 270 Electoral College votes needed to win as states kept counting mail-in ballots. Biden held a narrow lead in Wisconsin while Trump’s campaign said it had filed a lawsuit to try and halt vote counting in that state.
A surprise win by Republican Senator Susan Collins in Maine dimmed hopes by Democrats that they could get control of the U.S. Senate.
“Even if Joe Biden wins the Presidency, it looks like we are going to have a divided congress so the opportunity to have meaningful change at the fiscal level is pretty slim, and that is what is being priced into the back end of the market today,” said David Joy, chief market strategist at Ameriprise Financial in Boston.
“If we are going to have a similar type of economic environment as we’ve had, then we are going back to an emphasis on trying to find earnings in a relatively scarce earnings environment, back to the same winners as before”.
The CBOE volatility index .VIX, a gauge for short-term volatility, hit a two-week low after spiking to a four-month high in the run-up to the election.
U.S. stock futures rise, extending the post-election rally
U.S. stock index futures rose in overnight trading on Wednesday as investors hoped that the winner of the U.S. presidential election would be determined soon.
Futures contracts tied to the Dow Jones Industrial Average rose 60 points, indicating an opening move gain of 54 points at 9:30 a.m. ET on Thursday. S&P 500 futures rose 0.2%, while Nasdaq 100 futures jumped 0.5%.
Guggenheim’s Scott Minerd believes in post-election rally, has ‘fairly positive’ market outlook
Guggenheim Partner’s Scott Minerd told CNBC that Wednesday’s rally on Wall Street makes sense, despite the uncertain outcome in the presidential race between President Donald Trump and Democrat Joe Biden.
“I was always of the opinion, regardless of the outcome, short of getting anarchy in the street, that this would be good for stocks,” the firm’s global chief investment officer said on “Closing Bell.” “I honestly believe a blue wave would be better, but I think even if Trump were to be president, that people would say, ‘Hey, we’re not getting any big tax increases and we have a green light as long as the economy stays on track.’”
Reference: CNBC, Reuters
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