A new coronavirus stimulation agreement is still being made between Democrats and Republicans, as they cannot agree on a conclusion.
US futures were volatile early Wednesday morning as the race for the presidency in key battlefield states was imminent, signaling a tense competition.
Dow Jones industrial index futures rose 125 points after falling more than 300 points in a short time. The blue-chip average rose about 555 points on Tuesday to close at its best day since July.
The S&P 500 futures were down 0.5 percent in the short term, giving up early gains as President Donald Trump and Democratic candidate Joe Biden are in a tight race in Florida, where there are 29 big votes. voters to win.
Trump is expected to win Ohio, a state that must win on the way to re-election, as does Iowa. Other heavily disputed states, including Georgia, have also voiced. Futures for the broad S&P 500 Index are now up 1.1 percent.
Biden has 223 electoral college votes and Trump has 174 as of 12:30 a.m. ET.
Biden won California, Oregon and Washington. Before that, he had been to New Hampshire, Colorado, District of Columbia, New Mexico, New York, Virginia, Vermont, Rhode Island, New Jersey, Massachusetts, Maryland, Illinois, Delaware and Connecticut.
Meanwhile, Trump assures Idaho, Utah, Kansas, Missouri, Nebraska, Louisiana, Wyoming, North Dakota, South Dakota, Kentucky, West Virginia, Indiana, South Carolina, Oklahoma, Tennessee, Mississippi, Alabama and Arkansas.
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Nasdaq futures were up 2.7%.
According to Andrew Mies, Chief Investment Officer at 6 Meridian, a registered investment advisor.
Then, the tech-heavy Nasdaq Composite futures grew higher on expectations that Trump’s win could mean more “status quo” and less likely regulation for firms. big technology.
China’s overseas yuan fell more than 1% as the race to the White House remains strained. Investors have been betting that Biden will be less likely to restart a trade war than Trump, analysts say. But the coin was sold off overnight as Trump was still competing in the race.
“The betting markets are signaling that Trump is more likely to win than previously thought,” Mies said. “It’s not good for trade and it hurts the yuan.”
Stocks rallied on Tuesday as investors hoped the end of the tough US presidential campaign could soon remove the heavy uncertainty that had sent markets reeling recently. Wall Street’s last two rising days helped the S&P 500 recover by nearly half the 5.6% drop from last week, the worst since the market plunged in March.
Stocks generally do well on Election Day. Tuesday was the second best Election Day ever for the S&P 500 with a 1.8% gain, according to LPL Financial. In fact, this is the fifth consecutive time the stock has been higher on Election Day and the eighth in 10 years.
Some analysts say this week’s rallies on Monday and Tuesday may reflect a slightly higher probability that Wall Street could avoid a controversial electoral outcome. Although the volatility could continue for the foreseeable time if there is a controversial outcome, the person added.
Investors and economists have been calling for an extension of the stimulus since the end of the last round of additional benefits to laid-off workers and other support previously approved by Congress.
“The end result of the president and Congress will have an impact on the speed and complexity of the fiscal aid package as well as possible tax changes, but the uncertainty of the election will allowing the market to revert its vision to economic status. Angelo Kourkafas, investment strategist at investment firm Edward Jones, said in a note.
If Biden wins, as polls show, that thought could open the door to a massive package of support for the economy, especially if the Democrats also take control of the Senate. Some sectors of the market will benefit from a massive stimulus effort and infrastructure spending will increase more than the rest of the market on Tuesday, including shares of smaller firms. and industrial enterprises.
According to Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, a registered investment advisor, if Trump wins and the Senate remains under Republican control, then that could lead to less aggression. better than the Democratic sweep. Meanwhile, a Biden and Republican Senate win will be least in favor of the stock, as it means the lowest chance of stimulus.
While the election is attracting the attention of investors, many other market events are popping up this week. The Federal Reserve is meeting on interest rate policy and will announce its decision on Thursday. Its previous moves of slashing interest rates to record lows and aggressively entering the bond market to push prices higher have helped Wall Street soar since March.
Hanging above all is an ongoing coronavirus pandemic. Some European governments are putting restrictions on businesses in hopes of stopping the virus from growing worse. In the United States, where infections are also increasing at an alarming rate, it’s worrying that the fear of this virus alone could dampen companies’ revenues.
“Investors want something before January, especially as we begin to enter the acute COVID-19 phase at both,” said Eric Freedman, chief investment officer at US Bank Wealth Management in Minneapolis. Europe and the United States. “A lot of concerns about a targeted shutdown and the possibility of Europe having to extend the shutdown”.
The Labor Department will also release its October jobs report on Friday, where economists are expected to see another slowdown in growth.
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Stocks typically thrive amid a Washington’s deadlocked legislative standoff and a historic Congress split is the best scenario for investors.
Since 1950, the average annual stock return for the broad S&P 500 stock index has been 17.2% under Congressional division, according to LPL Financial. It drops to 13.4% when Republicans control both the House and Senate, and to 10.7% when Democrats control both houses.
That suggests that markets may prefer division of power as it would make it harder for lawmakers to undo existing policy measures, experts say. Republicans now control the Senate and the House Democrats.
“The Senate is more important to the stock market than who is in power in the White House,” said Zaccarelli.
“The big surprise in 2016 was that the polls went wrong in the presidential election, but we believe the big surprise in 2020 is not the false polls in the presidential election, but rather. that they will prove wrong in the Senate elections, ”added Zaccarelli.
According to Ryan Detrick, senior market strategist at LPL Financial, when broadening the scenario to include the presidency, the best situation for stocks since 1950 is a Democratic president and Congressional Communist. Republican and Democratic Congressional presidents are the weakest, according to Ryan Detrick, senior market strategist at LPL Financial.
Portfolio managers have advised clients to be cautious when selling stocks based solely on election results as they may miss out on future profits.
According to data from SunTrust Private Wealth Management, investors selling just before President Barack Obama will miss out on 26% total returns in 2009 and the start of the second strongest bull market in history. . And investors selling just before President Trump took office would miss out on a 22% return in 2017, the data show.
“We don’t think investors should change their long-term strategy based on the election,” Kourkafas said. “A broader view of market performance can be helpful in avoiding the temptation to execute knee responses to electoral volatility.”
Contribution: Associated Press
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