Americans seem to want a divided government, and that could be good news for growth stocks, CNBC’s Jim Cramer said Wednesday.
“Eventually we can stop fretting about politics and get back to business and your money because a divided Congress and a blue white house … is nirvana for growth stocks.”Bad money“Host said.
With Democratic candidate Joe Biden close to winning the White House and Republicans likely to retain control of the Senate after Tuesday’s election, Cramer believes the status quo will reduce the chances of lawmakers paying capital gains taxes raises, as the former vice president suggested in his proposal, tax plan.
“They don’t want upheaval, and they certainly don’t want higher taxes, which would have been on the agenda if the so-called blue wave had flooded Washington,” Cramer said, noting that it would have an impact on the portfolios. “It’s starting to look like Biden is going to win, but he has to rule with a Republican Senate.”
The comments came after Wall Street extended its winning streak for a third straight session with the tech heavy Nasdaq Composite roaring 3.85% higher to 11,590.78. The S&P 500 gained 2.21% on the day to close at 3,443.44 Dow The industrial index rose more than 367 points, or 1.34%, to 27,847.66.
Shares rose as election results continued to rise. The president’s race has yet to be scheduled as the major battlefield states continue to count the ballots. Meanwhile, the Democrats have retained power in the House of Representatives. The party had also hoped to get at least four seats and gain control in the Senate, but Majority Leader Mitch McConnell and Republicans have narrowed those chances.
“Money managers dumped growth stocks and traded them for more cyclical names and bet on a massive federal spending project in January,” Cramer said. “Sure enough, we are now seeing a gigantic – perhaps the largest I’ve ever seen – rotation that is back out of value and into technological growth due to the cavalry stimulating the blue wave [is not] Come.”
After rising on Monday, banking, oil and industrial stocks took a hit on Wednesday. The SPDR S&P Bank ETF, or CFU, fell by more than 5% and Caterpillar fell more than 7%. Honeywell, 3M and JPMorgan ChaseAccording to Cramer, stocks benefited from Monday’s market rotation, all falling during the trading day.
Tech stocks, one of the top performing cohorts in the market this year, rose. Amazon, Microsoft and Facebook, whose stocks sold out days after last week’s quarterly results were released, rebounded in high single digits. modern micro devices rose by 8% and Apple recovered more than 5%.
“We don’t know exactly who’s going to win this thing … even if it looks good for Biden right now,” said Cramer. “However, I think that the electorate has spoken, and whatever this matter may be, there will be a peaceful transfer of power.”
Disclosure: Cramer’s charitable foundation owns shares in Facebook, Amazon, Microsoft, Apple, Honeywell, JPMorgan Chase, and Advanced Micro Devices.