For the second day, the markets continue to take solace in the tight election as a forecast of a divided Congress in which the economic and business status-quo will remain essentially unchanged. That’s what investors want, for the markets to keep going the way they’ve been, hopefully get more stimulus, definitely keep the Fed’s monetary policy loose. Tech and industrials will continue to be winners. So for the second day, there was a big boost, today 542 points on the Dow. The Nasdaq gained over 2% coming close to its September record; the S&P was boosted by a 4.4% surge in the tech index. Volume was way above the 4-week average at 10.4 billion.
THU NOVEMBER 5, 2020 6:26 PM
Wall Street rallies on bets for
divided U.S. Congress, Fed holds steady
DJ: 27,847.66 +367.63 NAS: 11,590.78 +430.21 S&P: 3,443.44 +74.28 11/4
DJ: 28,390.18 +542.52 NAS: 11,890.93 +300.15 S&P: 3,510.45
+67.01 11/5
NEW
YORK (Reuters) - U.S. stocks jumped on Thursday, as investors bet Republicans
would retain control of the Senate and block any major policy changes under a
possible Joe Biden White House that could dampen corporate profits. With votes still being counted in battleground
states, investors were abandoning cautious pre-election positioning, driving
all of Wall Street’s main indexes up for a fourth straight session. While a fiscal stimulus package is widely
expected, the size of any deal reached in a divided Congress is likely to be
much smaller than anticipated. This in turn could pressure the U.S. Federal
Reserve to pump more funds into the financial system, supporting equity prices.
Stocks got a brief additional boost from the Fed’s
statement on Thursday. The central bank kept its loose monetary policy intact and again
pledged to do whatever it can to sustain an economy severely damaged by the
coronavirus pandemic. In the post-statement press conference, Chair Powell said
the Fed would not consider directly funding fiscal activities. Biden was edging closer to victory after
winning Michigan and Wisconsin, but his Democratic party appeared unlikely to win the Senate.
This eased investor worries about tighter regulations on Big Tech and a
corporate tax hike. “They stayed with
what the market had expected. I think there’s concern about the economy and the
trajectory of the economy. But basically, I don’t think they surprised the market; they
maintained their accommodative stance and maintained that fiscal stimulus is
needed,” said Quincy Krosby, chief market strategist at Prudential Financial in
Newark, New Jersey. “Given the scenario of an election where
you’re still counting ballots, it would be very difficult for the Fed to insert
itself at this point.” Some market
participants cautioned, however, that it was not yet certain that Congress will remain split,
so there is a slim chance markets could be in for a shock.
The
Dow Jones Industrial Average rose 542.52 points, or 1.95%, to 28,390.18, the
S&P 500 gained 67.01 points, or 1.95%, to 3,510.45 and the Nasdaq Composite
added 300.15 points, or 2.59%, to 11,890.93. This week’s rally marked
the biggest four-day percentage gain for each of the three major indexes in
nearly seven months.
The tech-heavy Nasdaq, packed with “stay-at-home”
corporate winners under this year’s lockdowns, gained well over 2% and was within striking
distance of its Sept. 2 record closing high.
The Philadelphia SE semiconductor
index surged 4.40% to close at an all-time high, while technology, up
3.12% provided the biggest boost to the S&P 500. Qualcomm Inc rocketed 12.75% higher after the
chipmaker forecast fiscal first-quarter revenue above estimates as it predicted
solid growth in 5G smart phones sales next year.
Nearly all 11 of the major S&P 500
sectors moved higher with the exception of energy in a broad rally, and the VIX
volatility index, which has risen in recent months as investors feared the vote
might spark falls in shares, touched its lowest in three weeks. The materials sector gained 4.05% to hit a
record, boosted by a 6.15% rise in shares of U.S.-German industrial gas
producer Linde.
Advancing issues outnumbered declining
ones on the NYSE by a 4.57-to-1 ratio; on Nasdaq, a 3.30-to-1 ratio favored
advancers. The S&P 500 posted 75 new
52-week highs and no new lows; the Nasdaq Composite recorded 155 new highs and
21 new lows.
Volume
on U.S. exchanges was 10.42 billion shares, compared with the 9.16 billion average for the full
session over the last 20 trading days.
No comments:
Post a Comment