U.S. stocks jumped on Thursday as investors bet Republicans would hold onto the Senate and prevent changes under a possible Joe Biden White House that would crimp corporate profits.
With votes still being counted in battleground states, investors abandoned cautious pre-election positioning, driving Wall Street’s main indexes up for a fourth straight session.
S&P emini futures dipped 0.3% late in the day as Democratic candidate Biden edged closer to defeating Republican President Donald Trump, with the contest hinging on a dwindling number of uncounted votes..
While investors widely expect a fiscal stimulus package, the size of a deal reached in a divided Congress is likely to be much smaller than it would be under a Democratic-controlled Congress. That could pressure the U.S. Federal Reserve to pump more funds into the financial system, supporting equity prices.
Also on Thursday, the Fed kept its loose monetary policy intact and again pledged to do whatever it can to sustain an economy crippled by the coronavirus pandemic. In a post-statement press conference, Chair Jerome Powell said the Fed would not consider directly funding fiscal activities.
“They stayed with what the market had expected,” 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.”
Betting odds heavily favor Biden, with the Smarkets betting website now reflecting a 10% expectation Trump will retain the presidency.
However, Democrats appeared less likely to win the Senate from Republicans. That eased investors’ worries about tighter regulations on Big Tech and a potential corporate tax hike.
The Dow Jones Industrial Average rose 1.95% to end at 28,390.18 points, while the S&P 500 gained 1.95% to 3,510.45.
The Nasdaq Composite climbed 2.59% to 11,890.93.
Volume on U.S. exchanges was 10.42 billion shares, more than the 9.16 billion average for the full session over the last 20 trading days.
The S&P 500 has surged over 7% so far this week, its strongest four-day gain in nearly seven months.
Since Election Day on Tuesday, the S&P 500 has rallied 4%, while Facebook has jumped 11% in the same period, with investors betting on reduced risk of antitrust scrutiny.
The tech-heavy Nasdaq, packed with “stay-at-home” corporate winners under this year’s was within striking distance of its Sept. 2 record closing high.
Qualcomm Inc rocketed almost 13% higher after the chipmaker forecast fiscal first-quarter revenue above estimates as it predicted solid growth in 5G smart phones sales next year.