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US stock index futures rose in overnight trading on Wednesday as investors hoped the winner of the US presidential election would be determined soon.
Futures contracts linked to the Dow Jones Industrial Average rose 70 points, indicating a gain of the opening movement of 64 points at 9:30 am ET on Thursday. S&P 500 futures were up 0.1%, while Nasdaq 100 futures were up 0.3%.
Late Wednesday, NBC News predicted former Vice President Joe Biden to be the winner in Wisconsin and Michigan, both claiming President Donald Trump won in the 2016 presidential election. Biden would then be just 17 votes away from Electoral College. away from victory, NBC News reported on Wednesday.
Even with the president-elect unclear, shares rose widely during Wednesday’s trading session as hopes for a blue wave in Congress waned, which some have argued would be a headwind for areas of the market, including Big Tech.
“It seems likely that we will see a divided Congress, which, based on history, has been the preference of the stock market,” said Lindsey Bell, chief investment strategist at Ally Invest. “You can see that this expectation is valued in the market [Wednesday] with health care, communications services and technology actions are leading the market, “he added.
The Dow ended the session on Wednesday with a gain of 367.63 points, or 1.3%. At the peak of the session, the average of 30 stocks earned 821 points. The S&P 500 gained 2.2%, while the Nasdaq Composite was up 3.9%.
The surge in U.S. stocks came despite election results remaining on hold after record turnout, as well as a leap in absent voting as people stayed home amid a spike in Covid-19 cases.
Trump’s campaign said he would demand a recount in Wisconsin, while last Wednesday he announced he was suing to stop ballot counting in Michigan and Pennsylvania.
Trump on Wednesday night tried to falsely claim victory in Pennsylvania, Georgia, North Carolina and Michigan. NBC News has yet to call the battlefield states of Pennsylvania, Georgia and North Carolina. Trump’s comments followed his statement early Wednesday that he had won the race, despite not having counted millions of votes.
Late Wednesday afternoon, Biden said in a speech in Wilmington, Delaware, that he expected to win the election. The Democratic candidate’s comments followed up on remarks by campaign leader Jen O’Malley that Biden would be “the next president of the United States.”
Meanwhile, the Democrats were expected to retain control of the House, as the overthrow of the Senate became increasingly unlikely.
“Without the blue wave, the Senate is likely to remain very divided, which will limit the political options of whoever wins the presidency. This likely rules out any substantial tax activity, as well as limiting any action to control major tech companies.” said Brad McMillan, chief investment officer for Commonwealth Financial Network. Facebook gained 8.3% on Wednesday, while Amazon and Alphabet were up more than 6% each. Apple and Netflix increased by 4% and 2% respectively.
McMillan added that part of Wednesday’s large rally was due to the elections, which had weighed on the markets, and which finally took place.
“The markets are reacting very positively to the fact that much of the electoral uncertainty has passed. Not all, but at least the worst results appear to have been avoided. The markets hate uncertainty, and this is likely a favorable wind for a little bit, “he said.
However, some strategists have noted that a contested election, which is not out of the question at this point, could lead to a steep drop in stocks in the near term.
“More than anything else, the market is looking for a peaceful transition of power. Social unrest or contested elections could trigger a significant increase in volatility,” said Don Calcagni, chief investment officer of Mercer Advisors.
Senate Majority Leader Mitch McConnell said on Wednesday that passing additional stimulus will be the House’s top priority when it meets again, though analysts warned that without a blue wave the package will be smaller than the $ 3 trillion. that the Democrats were looking for.
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