U.S. stocks jumped on Thursday as bets on Republicans retaining control of the Senate eased worries of major policy changes that could hurt corporate America under a Joe Biden White House, even as the presidential election hung in the balance.
With counting continuing in the battleground states, investors were abandoning cautious positioning that many took ahead of the election, driving all of Wall Streets main indexes up by around 2.
Analysts predicted the fraught nature of the vote would hamper any moves by Congress to deliver more fiscal stimulus and put pressure on the U.S. Federal Reserve to pump more funds into the financial system, supporting more buying of stocks.
Whoever emerges as President is unlikely to have a supportive Congress willing to write the President blank fiscal cheques, said Albert Edwards, global strategist at Societe Generale.
That means only one thing more Fed intervention to sustain markets.
The Fed is set to issue a statement later, after a twoday meeting delayed for the election, and is widely expected to repeat its pledge to do whatever it can to help an economy ravaged by the coronavirus crisis.
Biden was edging closer to victory on Thursday after winning Michigan and Wisconsin, but his Democratic party appeared unlikely to win the Senate, potentially making it difficult to tighten regulation on Big Tech and raise corporate taxes.
The techheavy Nasdaq, packed with stayathome corporate winners under this years lockdowns, gained 2.2…