Markets rally as election gains continue
Wall Street’s post- election wave swept stocks solidly higher again Thursday, pushing the S&P 500 toward its biggest weekly gain since April.
Markets are banking on Tuesday’s election leading to split control of Congress, which could mean low tax rates, lighter regulation on businesses and other policies that investors like remain the status quo. It’s still unclear who will run the White House next year, though Democrat Joe Biden is pushing closer toward the needed mark as vote counting continues in a number of key states.
The S&P 500 rose 1.9%, its fourth straight gain of more than 1%, and is now up 7.4% for the week. That would be its best week since the market was exploding out of the crater created in February and March by panic about the coronavirus pandemic.
“The presidential election is not settled, the Senate is not settled, but we’re getting a post-election rally,” said Ross Mayfield, investment strategist at Baird. “The odds at this point seem fairly set in stone, so investors are feeling pretty comfortable making the bets that they’re making.”
The S&P 500 rose 67.01 points to 3,510.45. The Dow Jones Industrial Average gained 542.52 points, or 1.9%, to 28,390.18. The Nasdaq composite climbed 300.15 points, or 2.6%, to 11,890.93. Small company stocks also had a strong showing. The Russell 2000 small- cap index picked up 44.96 points, or 2.8%, to 1,660.05.
The indexes and U. S.
bond yields held steady after the Federal Reserve issued its latest monetary policy update. The central bank said that it will leave its key interest rate at a record low near zero. It also reaffirmed its readiness to do more if needed to support the economy under threat from a worsening coronavirus pandemic.
Technology stocks helped power the rally, as they have through the pandemic and for years before that. Rising expectations that Republicans can hold onto the Senate are eas
ing investors’ worries that a Democratic- controlled Washington would beef up antitrust laws and go after Big Tech more aggressively.
Apple climbed 3.5%, Microsoft rose 3.2%, and Amazon added 2.5%. Facebook gained 2.5% and Google’s parent company rose 1%. They’re also the five biggest stocks in the S&P 500 by market value.
Shares in cannabis companies marched higher after voters in several states cleared the way for sales of legal marijuana for adult or medical use. Tilray jumped 30.3%, though the stock is still down 54.4% so far this year.
Broadly, markets are seeing split control of Congress as a case of what Mizuho Bank calls “Goldilocks Gridlock.”
Investors see cause for optimism if either Biden or President Donald Trump ultimately wins the presidency, and what they want most of all is just for a clear winner to emerge. Stocks “fear uncertainty rather than the actual outcome,” strategists at Barclays wrote in a report.