Stocks rise sharply while markets monitor politics
Tech-heavy Nasdaq enjoys biggest gain in over 6 months
Technology and health care companies led a stock market rally Wednesday, as Wall Street embraced the upside of more gridlock in Washington.
The S&P 500 rose 2.2% for its best day in five months. The benchmark index had been up 3.5% before themarket lost some of its momentum toward the end of the day.
That pullback wiped out more than 450 points from the Dow Jones Industrial Average, though the bluechip index still closed more than 360 points higher.
The Nasdaq was the standout, notching its biggest gain in more than six months as traders doubled down on technology stocks. Health insurers were big winners, too, as prospects for an overhaul of the industry dimmed.
The fate of the presidency remains undecided as neither President Donald Trump or Democratic challenger Joe Biden has secured the 270 Electoral College votes needed to win Wednesday.
After a tumultuous overnight session in global markets where Trump prematurely declared victory, Wall Street acted as if the occupant of the White House might be secondary.
Analysts said the gains came as markets focused on the benefits of the country’s political control remaining split between Democrats and Republicans.
With Republicans edging closer to retaining control of the Senate, prospects dimmed for the tax increases and tighter regulations on businesses that investors expected if Democrats scored an electoral sweep.
But a big stimulus effort for the economy that some on Wall Street say is needed nowseems unlikely aswell.
“The first information that people are digesting is that a split government is OK, and we can deal with this,” said Melda Mergen, deputy global head of equities at Columbia Threadneedle.
“No big changes are expected anytime soon on the policy side.”
She cautioned, though, that the initial moves for the market may not last.
“It’s a very quick reaction without knowing the final results,” she said. “It’s emotional rather than rational.”
The S&P 500 rose 74.42 points to 3,443.44. The Dow added 367.63 points, or 1.3%, to 27,847.66. The Nasdaq gained 430.21 points, or 3.9%, to 11,590.78.
Much of Wednesday’s strength for Wall Street was dueto big gains for technology stocks.
Investors have increasingly seen these stocks as some of the safer bets in the market, able to grow their profits even in a pandemic as more of daily life shifts online.
They don’t need a big stimulus effort for the economy as much as other companies, and the likelihood of Washington approving such a package dropped with the chances of a Democratic sweep. That led to the much better performance for the techheavy Nasdaq over other indexes.
Microsoft rose 4.8%, Amazon climbed 6.3%, Facebook surged 8.3%, and Google’s parent company gained 6.1%.
Cigna, United Health Group and Anthem were among the biggest gainers in the S&P 500, as investors bid up health care stocks.