Wall Street is expected to hate uncertainty but as the presidential race continues, investors may not be happier.
If Biden wins, as it seems likely, he will become the first president since George HW Bush to enter office without the control of both the House and the Senate, a result that indicates a legal hurdle of at least two years.
It’s a view that looks like Wall Street. One that gives Republicans in the Senate little incentive to formulate a new, larger coronavirus stimulus package, which Democrats had hoped for, and the power to block tax increases, larger spending programs and tougher regulations.
Stocks rebounded on Thursday, with the Dow and S&P 500 rising at least 1% in four straight sessions for the first time since 1982, with stock indices gaining the biggest weekly gain since April, with the Dow down 7.1%, the S&P 500 and the Nasdaq 7.4 % And 9% more.
Oliver Jones, a senior economist at Capital Economics, told the Guardian: “Things like tighter tax policy, tougher corporate reforms are a bit of a relief without Democrats, who have more control over Congress.
“Essentially, that position seems to continue, which has been chosen by most companies.”
Brad Man Camilla, chief investment officer of the Commonwealth Financial Network, attributed some of the gains to the prospect of an imminent election, despite the smooth running of the election and the legal challenges.
Looking ahead, Macmillan told the Guardian that markets were encouraged by the Biden administration’s more progressive, spending-high spending proposals likely to be obtained by a politically divided legislature.
“Biden’s economic plan includes significant new corporate taxes and capital gains taxes, all of which would have been very messy for the market,” Macmillan said. “The dangers of the blue wave and the green new deal are now off the table.”
Wharton’s finance professor Jeremy Siegel also welcomed the result, although the final result of the presidential election remained unresolved. “Honestly, the combination is great for the economy and it’s great for the markets,” Siegel told CNBC on Wednesday.
Historical roots are many decades behind in the market enthusiasm for a divided government. In 2001, markets rallied after Democrats handed control of the lower house to Democrats in the midterm elections.
“The period for good performance is the period where houses were divided in terms of leadership,” financial adviser Melody Hubbs noted at the time.
As of Tuesday, markets have also been overwhelmed by the prospect of government infrastructure spending, which could pump billions of taxpayer dollars into the country’s energy and transportation systems.
The political climate could also be brighter for the big tech, which is facing a no-confidence motion under the Trump administration. Prior to the election, Feng (Facebook, Apple Pal, Amazon, Netflix and Google) stocks, in particular, showed jitter after months of impressive epidemic gains.
In an investor note, Dan Ives of Wedbush Securities said the street seems to have gotten a ‘goldilocks x election result’ for tech stocks, with no ‘blue wave’ (the blackout remains red) and the potential Biden White House is now on the horizon. On thursday.
“With the Republican Senate likely to be in control, the prospect of major legislative changes to the antitrust law is now in the eyes of investors, who have posed the greatest risk to tech stallwarts with the impact of the wave in the sector.”
Eves said the possible election result is a “green light to buy tech stocks” and predicted that large tech stocks could rise 10% to 15% by the end of the year. “We continue to have stories of secular development until 2021,” he wrote.
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