Tech-led stocks in the US began climbing when the market opened up on Wednesday morning, despite there being a lack of clarity in terms of who will win the 2020 presidential election.
According to reports, The Dow Jones Industrial Average increased by 500 points, or 1.7%. The S&P 500 traded 2.3% higher while the tech-heavy Nasdaq Composite increased by 3.2%. Mike Lewis is the managing director of US equity cash trading at Barclays, and spoke with the press this morning about these surges.
“I think that the outlook going forward for markets is this is going to be more about policy and the Fed than it’s going to be about politics, which is a good thing for markets.”
Key swing states like Wisconsin and Pennsylvania could take a while to fully determine how the votes will lean. Both candidates and their camps are confident in their paths to victory this week.
Amazon, Microsoft and Apple all saw spikes of at least 3% in their stocks while Facebook increased by 7%, and Google-parent company Alphabet jumped more than 5%. Traders on Wall Street attribute these spikes to a multitude of factors. The possibility that Republicans will maintain control of the Senate is a positive for the groups, as a Democrat congress could have weighed down on the high-growth sector, according to Barry Bannister, Stifel Head of Institutional Equity Strategy.
“It appears investors may be satisfied with at least half a Republican Senate and no tax increase, knowing they have a ‘Fed put’ if fiscal assistance is slower in coming. This favors Growth stocks over Value near-term.”
Traders are also still grappling with the idea of a contested election, as Wall Street strategists claim that could have major consequences for the stock market. “News of a contested election could cause a sharp drop in stocks in the very short term, but we do not see it as a bearish gamechanger,” Tom Essaye, founder of the Sevens Report, said.
Traders are also watching the Senate race closely as the result of that race will have major implications on the future of the market as a whole. A Democrat win in the Senate and a Biden presidency has a lot of traders worried about the higher tax rates that would impact technology shares especially.
On the other hand, some traders think a blue wave in the Senate and White House could lead to a larger stimulus package for Americans as we continue to battle the coronavirus pandemic; which would also boost stocks linked to the larger economy.
“When this is all said and done, I still believe equities will move higher regardless of who wins the Oval Office. The coronavirus pandemic and U.S. monetary policy will be bigger market drivers over the long haul,” said Ryan Nauman, market strategist at Informa Financial intelligence.
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at email@example.com.