Stock futures opened higher on Sunday evening as traders captured President-elect Joe Biden’s victory in the U.S. presidential election, ending a day-long nail-bite that the candidate would prevail in winning the White House.
Contracts on the Dow rose more than 100 points, or about 0.5%, overnight at the start of the session, positioning the index to extend its strong gains from last week. Stocks had recovered from Biden’s victory in advancecalled by the Associated Press on Saturday. The S&P 500 has a weekly advance payment of more than 7% Technology and health stocks led gains for the best week since April.
Biden, along with Vice President-elect Kamala Harris, will, among other things, instigate a drive for greater fiscal stimulus, a public health option, investment in sustainability and a more appropriate approach to foreign affairs and trade. And in his victory speech on Saturday Biden promised to work towards these goals in order to unite a deeply divided nation. He called for an end to this “dark era of demonization in America” and underlined: “If we can choose not to work together, we can choose to work together. ”
So far, traders have bet that some of the suspected “market-negative” potential of a Biden presidency, such as corporate tax increases, will be mitigated by a Senate that remains under Republican control. Two races in the Senate are still pending in Georgia and will not be decided until January, although the forecast markets have so far given it Democrats have relatively little chance win both seats that the party needs to claim a majority in the Chamber.
“A split government would limit the ability of the Biden government to implement plans for comprehensive fiscal incentives and laws related to public investment, taxes, health care and climate,” analysts at the BlackRock Investment Institute said in a statement on Saturday. “We see an increased focus on sustainability under a divided government, but more through regulatory measures than through tax policy or spending on green infrastructure. This would likely also mean a return to more predictable trade and foreign policies – although the rivalry between the US and China will continue to increase due to mutual support for a more competitive stance. “
The analysts added that during the Lame Duck session in Congress, “some fiscal stimulus seems possible,” although the size and scope of an upcoming package is likely to be much smaller than what a united democratic government could have pushed.
“We are closely monitoring the reaction of public finances as an early cut could prevent an economic restart that has so far been a pleasant surprise,” they said.
Other economists were also optimistic that a stimulus package could be passed before Inauguration Day, even after months of discussions between representatives of the Trump administration and congressional lawmakers stalled without an agreement.
“We’re becoming increasingly hopeful that pressure from business leaders and vulnerable Republican senators in 2022 will mean that something can pass before the end of the year, and preferably before the end of the month,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. said in a note Sunday.
For the soaring tech stocks that have largely driven the market higher this year, a Biden president victory with a likely Republican Senate is the result of the “Goldilocks election,” according to WedBush analyst Dan Ives.
“Investors should expect US-China tensions to ease and the cold tech war’s“ decoupling path ”to be a bullish sign for Apple (AAPL) and semi [semiconductor] Shares ahead, ”Ives said in a note on Saturday. Concerns about a tougher cartel environment for big tech companies are also likely to have subsided, he added.
Biden will also set a more serious tone in tackling the coronavirus pandemic, as the outbreak has already cost more than life 230,000 Americans contracted more than 9.8 million and US economic activity dragged to an all-time low. And while votes were being counted last week, coronavirus cases in the U.S. hit a grim milestone: more than 120,000 new cases were reported on Friday alone. Biden will announce a new 12-person coronavirus task force on Monday as one of his first major acts during his change of president Axios and CNN.
6:01 p.m. ET Sunday: Stock futures open higher after Biden was named the winner of the presidential election
Here were the main moves in the markets from 6:01 p.m. ET Sunday evening:
S&P 500 Futures (ES = F.): 3,517.00, plus 16.25 points or 0.46%
Dow Futures (YM = F.): 28,334.00, plus 130 points or 0.46%
Nasdaq Futures (NQ = F.): 12,141.5, plus 66.5 points or 0.55%