Wall Street soared Wednesday morning, even as investors braced for a lengthy wait to determine the winner of the presidential election.
The Dow Jones Industrial Average climbed by around 800 points, with the S&P 500 trading higher by around 3.4 percent as traders ditched infrastructure and industrial stocks in favor of tech stocks. The rebound came as traders reassessed the possibility of a “blue wave” that would have accelerated the passing of a stimulus package.
The Nasdaq jumped by as much as 4.5 percent for its biggest gain since April, as investors sought out safer havens in a sector that has performed well under stay-at-home orders. Shares in Facebook were up 8 percent, Alphabet was higher by 7 percent, and Amazon gained by around 6 percent.
Nov. 4, 202002:09
Traders prepared to face the two outcomes they had most feared in the run-up to the election — a contested result, or no Senate majority but a win by former Vice President Joe Biden.
Some of the biggest swings came in overnight trading, after President Donald Trump falsely claimed he had won the election. Neither NBC News nor any other major news organization has declared a winner.
“Frankly we did win this election,” Trump told supporters and members of the media in a White House address shortly after 2 a.m. ET, with millions of votes still to be counted.
“We believe we’re on track to win this election,” Biden told his own supporters late on Tuesday night.
Wall Street dislikes uncertainty — and after the 2000 presidential election, the S&P dropped by nearly 5 percent in the weeks between Election Day and Dec. 12, when the Supreme Court ruled in favor of George W. Bush.
Concerns about a succession are magnified this time around, due to the coronavirus pandemic — especially if a weekslong fight were to imperil a fiscal stimulus bill.
“Risk sentiment is taking a hit from the growing possibility of a prolonged legal battle to resolve the outcome. If this were to go to the Supreme Court, then the results would take even longer — and that’s probably the worst-case scenario out of all the possible ones at the moment,” said Jesse Cohen, senior analyst at Investing.com.
On Tuesday, Wall Street had been buoyed by investor hopes that a clear winner would be declared and that a fiscal stimulus deal would be swiftly passed, helping the U.S. inch its way toward economic recovery after the coronavirus pandemic.
The wide-scale job loss and economic disruption caused by the pandemic had many investors hoping that a “blue wave,” a united government in which Democrats run both chambers of Congress, would more easily pass legislation to provide critical fiscal support.
“There was no blue wave — which shows the high degree of division and fragmentation” in the U.S., said Dan North, senior economist at Euler Hermes North America. “In the absence of a clear majority, the only winner of this election is debt: We expect US debt, whoever wins, to reach 159 percent of GDP at the horizon of 2030.”