Stocks are rising as Wall Street expects Joe Biden to win

Shares opened sharply higher before facing some volatility and paring some of the gains.

The Daw (UNDUE) It was still up 1.2%, or about 320 points, in the early afternoon. At its highest point, the index has gained over 500 points. The widest Standard & Poor’s 500 (SPX) It rose 0.8%.

Both benchmarks track some of their losses from last week, when they recorded them The worst week since March.

Meanwhile, the Nasdaq composite (COMP) Reversed earlier gains and was down 0.1% in the early afternoon.

Although stocks usually prefer republican politics, Investors are eager for more financial incentives, That will boost the economy that is heading south again with the rise in coronavirus cases. Investors are expecting that the “blue wave” will increase the chances of passing a comprehensive stimulus package in the winter.

Investors believe that a Biden win could also mean less news and major risks for stocks in the near term.

“If the polls are nearly correct, Joe Biden will comfortably win the election and we will know that before midnight tomorrow,” said Andy Labrier and Don Schneider of Cornerstone Macro.

Even if the polls were wrong, they added, the evidence still pointed to Biden winning. Forecast market I expected Puts Biden’s win at 65%.

“We have emphasized that the Senate outcome is important to the course of fiscal policy,” City economist Andrew Hollenhurst said in a note to clients, although neither side is likely to get a blocking majority, so bipartisan cooperation is still needed. . For the next stimulus bill.

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“In any electoral scenario, we expect a financial package of $ 1.5 trillion in addition to a financial package, perhaps as soon as after the election,” Hollenhurst said.

Congress has been stuck negotiating a second stimulus deal since the summer. Investors have been waiting for the results, and have become wary of any headlines around the progress. What this really tells us is that markets believe the US economy needs more help to get back on track as the effects of the CARES Act run out.

So far, the economic improvements have been somewhat uneven. For example, millions of jobs have been added again since the spring close, however The economy is still running over 10 million jobs From February.

Millions of Americans still need government benefits to make ends meet, and that’s bad news because the US economy relies so heavily on consumer spending.

Analysts at Goldman Sachs (P) We expect consumer spending to dwindle in the coming months due to the resurgence of Covid-19, which keeps people at home, and any new stimulus package will likely take until 2021.

And as if these elections and their aftermath weren’t enough for investors to contemplate, the week is also filled with important economic reports, including the October jobs report.

Monday , Institute for Supply Management It reported that US factories performed better than economists expected in October. The sector PMI rose to 59.3 from 55.4 in September, the highest level since September 2018. Any value above 50 indicates growth in the sector.