NEW YORK (Reuters) – US stocks jumped on Thursday as investors bet that Republicans would retain control of the Senate and prevent any major policy changes under the potential Joe Biden White House, which could reduce corporate profits.
With votes still to be counted on the battlefield, investors were leaving cautious pre-election positions, driving all of Wall Street’s main indices for a fourth straight season.
Although the fiscal stimulus package is widely expected, the size of any deal in a divided Congress is likely to be much smaller than anticipated. This in turn will put pressure on the US Federal Reserve to pump more funds into the financial system, thereby supporting more purchases of stock.
The stock received an additional extra boost from the Fed’s statement on Thursday. The central bank retained its loose monetary policy and resolved to do whatever it could to maintain an economy severely damaged by the coronovirus epidemic.
Biden was approaching victory after winning Michigan and Wisconsin, but his Democratic Party was unlikely to win the Senate. This reduced investor is concerned about Big Tech and strict rules on a corporate tax hike.
Michael Arron, chief investment strategist at State Street Global Advisors in Boston, said, “Staying in the rally longer, it works for me but in some ways investors may be willing to marginalize themselves.”
“Things are never as good or as bad as they seem, but markets are running quite strongly in the post-election environment.”
Aron cautioned that it was not yet certain that the Congress would remain divided, so there was a slim chance that the market could suffer a setback.
Dow jones industrial average .DJI Rose 575.05 points or 2.06% to 28,422.71, S&P 500 .SPX Gained 77.76 points or 2.26% to 3,521.2 and gained in Nasdaq Composite .IXIC Added 310.07 points or 2.68%, to 11,900.85.
The tech-heavy Nasdaq, packed with “stay-at-home” corporate winners under this year’s lockdown, gained more than 2% and was within striking distance of its Sept 2 record closing high.
Philadelphia SE Semiconductor Index .SOX Soared 4.38% to an all-time high hit, while technology .SPLRCT And communication services .SPLRCL Led the beneficiaries among the S&P index.
All major S&P 500 sectors moved higher on a broader rally and the VIX Volatility Index .VIX, Which has risen in recent months as investors feared the vote could fall in stocks, reaching its lowest in three weeks.
Material index .SPLRCM US-German industrial gas producer Linde shares also touched a record by 6.55% rise LIN.N.
Qualcomm Inc. QCOM.O After the chipmaker’s estimate rose 13.08%, first-quarter revenue above estimates as it predicted solid growth in 5G smart phone sales next year.
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Advancing issues declining on the NYSE in the ratio of 4.93 to 1; On the Nasdaq, a 3.23-to-1 ratio favored advisers.
The S&P 500 posted 72 new 52-week highs and no new lows; The Nasdaq Composite recorded 149 new highs and 19 new lows.
Reporting by Chuck Mikolajack; Editing by David Gregorio