(Reuters) – US stocks jumped on Thursday as investors bet Republicans would hold on to the Senate and potentially prevent changes under the Joe Biden White House that would reduce corporate profits.
Votes are still being counted on the battlefield, with investors shunning the pre-election situation, driving Wall Street’s main index for a fourth straight session.
S&P Emini futures dipped 0.3% late in the day as Democratic nominee Biden got close to defeating Republican President Donald Trump, keeping up with the contest’s dwindling number of votes.
While investors widely expect a fiscal stimulus package, the size of a deal in a divided Congress is likely to be much smaller than in a Democratic-controlled Congress. This could pressure the US Federal Reserve to pump more funds into the financial system, supporting equity prices.
In addition, on Thursday, the Fed maintained its monetary policy and resolved to do everything it could to keep the economy suffering from the coronavirus virus epidemic again. At the press conference following a statement, Chair Jerome Powell said that the Fed would not consider financing fiscal activities directly.
“The market kept up with what was expected,” said Quincy Crosby, chief market strategist at Prudential Financial in Newark, New Jersey. “Given the scenario of an election where you are still counting ballots, it would be very difficult for the Fed to insert itself at this point.”
Betting bets did Biden heavily, with the Smarket betting website now showing 10% expectation that Trump would retain the presidency.
However, Democrats appeared less likely to win the Senate than Republicans. This reduced investor concerns over Big Tech and a possible corporate tax hike.
The Dow Jones Industrial Average rose 1.95% to close at 28,390.18 points, while the S&P 500 rose 1.95% to 3,510.45.
The Nasdaq Composite closed up 2.59% at 11,890.93.
Volume on the US exchanges was 10.42 billion shares, an average of over 9.16 billion for the full session over the last 20 trading days.
The S&P 500 soared more than 7% so far this week, its strongest four-day gain in almost seven months.
Since Election Day on Tuesday, the S&P 500 has gained 4%, while Facebook has jumped 11% in the same period, with investors placing bets at low risk of antitrust investigations.
(GRAPHIC: S&P 500 period after five-day presidential election -)
The tech-heavy Nasdaq, under this year, was packed with “stay-at-home” corporate winners, within walking distance of their Sept 2 record closing high.
Qualcomm Inc is up 13% after first-quarter revenue, with chipmakers forecasting a solid growth in 5G smart phone sales next year.
Additional reporting by Caroline Veletkevich; Editing by David Gregorio and Tom Brown