It was supposed to be the worst of possible outcomes: a combination of years of gridlock (a Biden presidency with a Republican Senate), coupled with a contested election (which Trump is set to do by contesting state elections all the way to the Supreme Court), was according to Wall Street a bearish trigger that could launch as much as 20% of downside to stocks.
Well, once again Wall Street was dead wrong, because despite predictions ahead of the election that not having an early clear result could derail stocks, equities soared another 2% overnight rising above 3,500 – up nearly 300 points from the early Sunday prints – as the prospect of gridlock provided some solace and calm, led by tech and healthcare stocks on hopes the election results won’t trigger major changes to taxes or regulations that have underpinned the bull market. In short – a continuation of the status quo for at least two more years.
Nasdaq 100 futures jumped another 2.6% after the index surged on Wednesday when the vote count failed to produce a Blue Sweep as the market had fully priced in. Healthcare stocks also surged amid relief that regulatory pressure that could have swept through the sector in a Democratic sweep would not materialize. Sectors seen benefiting from a major stimulus package, such as financials, weakened.