Wall Street stocks jumped Wednesday as markets absorbed the latest developments in the still-unresolved US presidential contest and apparently shrugged off the risk of legal challenges by President Donald Trump.
The Dow Jones Industrial Average climbed 1.3 percent to finish at 27,847.66, rising for a third straight session.
The broad-based S&P 500 gained 2.2 percent to 3,443.44, while the tech-rich Nasdaq Composite Index advanced 3.9 percent to close at 11,590.78.
Analysts attributed the rally to the demise of a “blue wave” election outcome that would have seen a complete Democratic sweep of Washington, including a takeover of the Senate and a White House win by Joe Biden.
Biden is still well-positioned to win the presidency, carrying leads in key states, but the Senate looks poised to remain in Republican hands.
Investors for now have shrugged off worries about a protracted legal battle after Trump wrongly claimed victory Tuesday night. The closely-watched CBOE Volatility Index — which is seen as a proxy on fear — fell sharply.
Markets did not move on headlines that Trump would file legal challenges to seek a recount in Wisconsin after that state was called for
After the close, Michigan too was put in Biden’s column, making his path to the needed 270 electoral college votes more likely. The major indices gained further in after-hours trading.The presidential race has overshadowed a fairly heavy release of economic data, including reports Thursday that showed weaker-than-expected private-sector hiring in October, and a softening of services sector activity.
The reports come ahead of the conclusion Thursday of the Federal Reserve’s two-day policy meeting.Analysts are watching to see if the US central bank will signal plans to do more to help support the economy which continues to struggle to recover amid a worsening coronavirus outbreak.
Shares of Uber Technologies shot up 14.6 percent and Lyft gained 11.3 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. Financial markets around the globe have been fluctuating wildly since vote counting in the US presidential election began on Tuesday, as investor’s prediction of a landslide victory for Democrats grew ever more unlikely.
.A tighter-than-expected race has traders nervous that a lengthy legal battle could follow, especially after President Donald Trump tried to claim victory while millions of votes were still uncounted. The president threatened to take the matter to Supreme Court.
Visions of a landslide Democratic victory began to dissipate overnight, with stock markets reflecting the shift. European markets opened sharply lower on Wednesday after Trump said he would involve the Supreme Court, but rallied again marginally as Biden took a slim lead in the key state of Wisconsin. US equity futures initially rose as a Trump victory proved more likely, then fell again following the threats before slowly recovering.
European markets countered Tuesday losses with modest gains on Wednesday. Germany’s DAX gained just 0.1% after opening on Wednesday while the CAC 40 in Paris rose 0.4% and the UK’s FTSE 100 went up 0.3%. By the end of trading, the DAX was up 1.7%, with the CAC 40 up 2.2% and the FTSE 100 up 1.5%.
Stock markets in the Asia Pacific region, meanwhile, had a relatively strong opening amid the uncertainty. Tokyo’s Nikkei 225, Seoul’s Kospi, and India’s Sensex advanced 1.7%, 0.6%, and 0.9%, respectively. While the Hang Seng index in Hong Kong was down 0.2%, Shanghai’s SSE Composite went up the same amount. The Nikkei closed out the day 1.7% higher and MSCI’s largest index of Asia-Pacific shares outside Japan showed a 0.4% gain.
US markets also woke up hopeful. The Dow Jones Industrial Average climbed 0.9% after opening Wednesday morning then finished the day up 1.3%, building on gains from 2% made on Tuesday. The S&P 500 opened 1.11% higher than the day before then finished up 2.2%, while the Nasdaq Composite gained 3.9% on Wednesday.
Traditionally Democratic policies, like higher taxes on corporations and greater regulatory oversight, are generally less attractive to investors than those of Republicans. But the political uncertainty that has characterized the Trump presidency has some betting on restored stability were Biden to win. The former vice president is also likely to push a large coronavirus stimulus package in the US, potentially creating economic activity that would be attractive to investors.
