Wall Street jumps on bets of Biden victory, stimulus hopes

In this news, we discuss the Wall Street jumps on bets of Biden victory, stimulus hopes.

(Reuters) – U.S. stocks surged on Tuesday as investors bet one of the country’s most divisive presidential races would end with a clear victory for Democratic candidate Joe Biden and an early agreement on more fiscal stimulus.

The 11 major S&P indices were higher at the start of the session, led by financials, health care and industrials.

Biden’s steady lead in national opinion polls raised hopes for a decisive result in Tuesday’s election as well as a bigger post-election stimulus package, analysts and managers said portfolio, even as the two campaigns brace for post-election conflicts.

“The markets expect not only a clear victory from Biden, but also a rather reflationary political reaction which will be accompanied by an increase in tax expenditures,” said Chris Bailey, Raymond James strategist in London.

Democrats are also favored to come out of 14 hotly contested US Senate races with full control of Congress in Tuesday’s election, although the final results of at least five of those contests may not be available for days or even months.

Yet competition in dynamic states is considered close enough that President Donald Trump can muster the 270 Electoral College votes he needs to stay in the White House for another four years.

Despite an accident caused by a coronavirus earlier this year, the S&P 500 has risen by about 55% since Trump claimed a thwarted victory in 2016 as lower tax rates under his administration boosted corporate profits .

Chart: “Biden” stocks vs “Trump” stocks

The CBOE volatility index, known as the investor fear gauge, fell for a second day after hitting a 20-week high last week on the surge in coronavirus cases around the world.

Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh, said a Biden victory could lead to some inflation, which would be beneficial for banks in particular.

“A Federal Reserve is committed to keeping rates lower while allowing not a flat curve but a curve with some steepening, then some inflation and you get a hip hurray for the banks.”

The S&P banking sub-index jumped 2.6% to its highest level in more than a week, while industrialists Caterpillar Inc and Honeywell International Inc rose about 2% each.

At 10:11 a.m. ET, the Dow Jones Industrial Average was up 553.70 points, or 2.06%, to 27,478.75, the S&P 500 was up 57.67 points, or 1.74%, to 3,367.91, and the Nasdaq Composite was up 171.87 points, or 1.57%, to 11,129.49.

Technology and communications services stocks, which fueled the Wall Street rally after the coronavirus crisis in March, were among the smaller gainers.

Arista Networks Inc jumped 18.6%, among the top winners in the benchmark S&P 500, after the network gearmaker reported better-than-expected quarterly profit.

PayPal Holdings Inc posted better-than-expected quarterly results, boosted by a surge in digital payments. However, its shares fell 3.1% after more than doubling in value since March.

The escalating problems outnumbered declines of 7.52 to 1 on the NYSE and 5.34 to 1 on the Nasdaq.

The S&P Index recorded 14 new 52-week highs and no new lows, while the Nasdaq recorded 33 new highs and 11 new lows.

Report by Medha Singh in Bengaluru; additional reports by Sruthi Shankar, Susan Mathew and Noor Zainab Hussain; Editing by Sagarika Jaisinghani and Anil D’Silva

Original © Thomson Reuters

Originally posted 2020-11-03 08:26:11.

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