By STAN CHOE, A.P. Business writer
NEW YORK (AP) – Stocks are still riding the post-Wall Street election wave, and the S&P 500 is up 2% in its biggest weekly jump since April.
Tuesday’s election has not yet clarified who will run the White House next year, although Joe Biden is pushing toward the required mark. Markets are banking on elections due to congressional division controls, which could mean lower tax rates and the continuation of other business-friendly policies.
The S&P 500 is on pace for its fourth straight gain of over 1%, as well as a 7.4% jump for the week. February and March would be its best week since the market exploded in panic about the cronovirus epidemic.
The Dow Jones Industrial Average was up 475 points or 1.7% at 28,323, as of 9:54 pm Eastern Time, and the Nasdaq Composite was up 2.4%.
Technology stocks were helping to lead the way, as they have through the epidemic and for years before that. The hope that Republicans could hold onto the Senate is reducing investor concerns that a Democratic-controlled Washington antitrust laws will have to go after Big Tech more aggressively.
The parent company of Apple, Microsoft, Amazon, Facebook and Google ranged between 1.8% and 4%. They are also the five largest stock sins of the S&P 500 by market value.
Broadly, markets are looking at Congressional partition control over what Mizuho Bank calls “Goldilocks gridlock”.
Jackson Wong, asset management director at Eder Hill Capital, said that with the expectation that Biden has a chance to win, it also raised hopes that US foreign policies might be “more explicit”. He said, “Investors are happy for this. So the markets are doing well.”
Stocks also climbed in European and Asian markets on Thursday.
Nevertheless, many analysts suggest that such powerful and widespread benefits may not persist. Big swing elections, draw-out elections are still hovering on the market.
President Donald Trump’s campaign has registered legal challenges in some major swing states, although it is unclear whether they can shift the race in their favor. Analysts say a long court battle without a clear winner of the presidency could increase uncertainty for markets and pull stocks down.
Washington’s split control also depends on whether the markets are not yet fully appreciated. The gridlock prospect makes it less likely for the US economy to come together on an agreement to give a big shot of stimulus.
This has been called by some investors and economists for last-round benefits for scheduled workers and other expired benefits. A report on Thursday showed that more workers expected economists for unemployment last week, though the numbers were slightly better than the week before.
Investors are still hopeful that Washington may agree on more stimulus to the economy, though they say it won’t be as large as it might have been after the Democratic sweep.
If there is no compromise between Congress and the White House, pressure may increase on the Federal Reserve to support the economy, if it can. The central bank has already lowered interest rates to record lows and has forcefully stepped in to raise prices in the bond market.
It will announce its latest decision on interest rate policy in the afternoon.
The yield on the 10-year Treasury declined to 0.76% from 0.77% late Wednesday evening. It was up from 0.90% earlier this week, when markets were still thinking that a Democratic sweep was possible that could become a major stimulus package for the economy.
Epidemics continue to weigh in worldwide, with particularly troubling rates increasing throughout Europe and the United States. Many European governments have withdrawn restrictions on businesses in hopes of slowing the spread.
In the US, even if strict lockdowns do not return by spring, the concern is that the worsening epidemic may change consumers ‘behavior sufficiently for companies’ profits.
In London, the FTSE 100 rose 0.5% as a four-week lockdown began in England, which would keep all shops selling non-essential items, such as books and clothes, closed. Scotland, Wales and Northern Ireland have also announced broad restrictions on economic activity.
The Bank of England hoped to help the economy with new lockdown measures by increasing its monetary stimulus.
In Paris, the CAC 40 increased 1.1%, while Germany’s DAX returned 1.6%.
In Asia, Hong Kong’s Hang Seng gained 3.3%, Tokyo’s Nikki 1.7%, South Korea’s Kospi rose 2.4% and Shanghai rose 1.3%.
AP Business Writer Elaine Kurtenb contributed.
Copyright 2020 The Associated Press. All rights reserved. This content may not be published, broadcast, rewritten or redistributed.