Stocks on Wall Street are rising higher despite the unusual political turmoil and the very real possibility that Democrat Joe Biden could win the 2020 election as some battlefield states are still too close. to call on Thursday.
Stocks closed higher after Thursday trading, with the Dow Jones Industrial Average and the S&P 500 both adding close to 2%, marking the fourth consecutive day of gains.
Often times, uncertainty can cause the market to decline. However, the results of the election so far have been going better than what investors expected.
Brian Walsh, Jr., Senior Financial Advisor at Financial conglomerate Walsh & Nicholson, told FOX Business that Wall Street is expecting a “green wave”;, meaning Democrats will choose the presidency and Senate, which they now deem unlikely. .
“If the current predictions are correct, we will have a Democratic and Republican Senate Chairman, which is a positive catalyst for the stock market,” said Walsh Jr. to speak. “Wall Street is a sigh of relief now that there is more regulation and progressive fiscal policies seem undeniable.”
The VIX Index, which measures volatility and fear on Wall Street, also fell from a recent high of 40 back to around 28 as “worst-case concerns have subsided,” says Jon Burckett-St. Laurent, a senior portfolio manager at Exencial Wealth Advisors, told FOX Business.
So far, Democrats have lost five seats in the US House of Representatives, a total of 208 seats compared to 190 for Republicans.
In the Senate, Republicans now have 48 seats compared to 46 for Democrats.
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A divided government will be less likely that some of the more progressive entries on Biden’s agenda will be passed, if he gets elected president.
That’s good news for Wall Street, which dislikes a number of tax policies, including raising taxes on the rich, increasing corporate tax rates and increasing regulation.
Burckett-St. Laurent added that investors are also concerned about antitrust action and major healthcare changes.
The prevailing view is that regardless of who wins, there will be a stimulus coming, which will boost the market.
Ryan Giannotto, CFA, research director at GraniteShares, said stimulus without a tax increase contributed to the “excitement” response on Wall Street.
Giannotto told FOX Business: “It’s the equivalent of a free Wall Street lunch: all the benefits of stimulus without a penny. “Moreover, despite the social and political implications of a divided or disputed government, Wall Street follows a much simpler calculation – all about ‘Benjamins.’
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Fed Chairman Jerome Powell on Thursday pointed out that the Central Bank will continue to support the US economy regardless of the outcome.
The Fed is buying a total of about $ 120 billion in the Treasury and mortgage-backed securities each month and intends to keep interest rates close to 0%.
Four key races, Pennsylvania, North Carolina, Georgia and Nevada, were still too close to call on Thursday night.
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