US Stocks In Rally Mode, Shrugging Off Election Uncertainty

Wall Street stocks were in rally mode Wednesday, shrugging off uncertainty over the still-unresolved presidential election and embracing the positives of a probably divided government in Washington

New York, (UrduPoint / Pakistan Point News - 4th Nov, 2020 ):Wall Street stocks were in rally mode Wednesday, shrugging off uncertainty over the still-unresolved presidential election and embracing the positives of a probably divided government in Washington.

Although there were early signs that the razor-thin US presidential contest could be headed towards litigation, markets for now are looking past that possibility.

"The good news is the uncertainty surrounding a very contentious election should soon be behind us, and investors can focus on the macro influences that ultimately drive direction -- inflation, interest rates, money availability and the prospects for domestic and global growth," said a note from Canaccord Genuity analyst Tony Dwyer.

Near 1620 GMT, the Dow Jones Industrial Average stood at 28,054.90, up 2.1 percent.

The broad-based S&P 500 gained 2.7 percent to 3,458.93, while the tech-rich Nasdaq Composite Index jumped 3.7 percent to 11,758.56.

With both President Donald Trump and challenger Joe Biden still having pathways to victory, investors were watching updates from half a dozen states that will determine a majority in the Electoral College.

The presidential race looked tighter than polls had suggested and Republicans also looked poised to maintain control of the Senate after polls also suggested the chamber would flip to Democratic control.

"We did not have a big blue wave," said Quincy Krosby, Prudential Financial's chief market strategist. "The Senate will stay under the control of (Majority Leader) Mitch McConnell." - Less chance of tax hikes - The likely Senate victory by Republicans lessens the chance of a large US stimulus package to boost an economy still slowed by the coronavirus pandemic. That dynamic was apparent in the Treasury market, where yields fell on expectations for diminished inflation.

In recent weeks, the market had warmed to the possibility of a "blue wave" outcome and the resulting boost to fiscal spending.

But investors are also finding things to like in more muted election results, which is seen as lessening the odds of major tax increases favored by progressive Democrats.

President Donald Trump claimed victory last night and called ongoing vote counts "a fraud," drawing rebukes from Biden and political observers.

But investors appeared unconcerned about a potential constitutional crisis, with the closely-watched CBOE Volatility Index -- which is seen as a proxy on fear -- sharply falling.

Overshadowed by the presidential race has been a fairly heavy release of economic data, including reports Thursday that showed better-than-expected private-sector hiring in October, but slower-than-expected services sector activity in that month.

The reports come ahead of Thursday's Federal Reserve meeting at which the US central bank expected to keep interest rates low as the US economy continues to struggle to recover amid a worsening coronavirus outbreak.

A key question during a news conference with Fed Chair Jay Powell will be whether he amplifies his call for more fiscal stimulus. Talks on a large package were halted just ahead of the election.

Large tech companies, which have benefited during the coronavirus economy, surged Wednesday, including Google parent Alphabet, which won 6.6 percent, Amazon, up 5.8 percent and Facebook, up 7.5 percent.

Shares of Uber Technologies shot up 12.3 percent and Lyft gained 11.8 percent after California voters backed a proposition that exempted ride-share rivals Uber and Lyft from a new state law requiring drivers to be treated as employees.