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Wall Street rallies on bets for divided U.S. Congress, Fed holds steady

Stock MarketsNov 05, 2020 04:11PM ET
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2/2 © Reuters. The statue of former U.S. President George Washington is seen across from the New York Stock Exchange (NYSE) following Election Day in Manhattan, New York City 2/2

By Chuck Mikolajczak

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 (NYSE:PRU) 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.

Unofficially, the Dow Jones Industrial Average rose 542.85 points, or 1.95%, to 28,390.51, the S&P 500 gained 66.97 points, or 1.94%, to 3,510.41 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 to close at an all-time high, while technology and provided the biggest boost to the S&P 500.

All 11 of the major S&P 500 sectors moved higher 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 index also hit a record, boosted by a rise in shares of U.S.-German industrial gas producer Linde (NYSE:LIN).

Qualcomm (NASDAQ:QCOM) Inc rocketed higher after the chipmaker forecast fiscal first-quarter revenue above estimates as it predicted solid growth in 5G smart phones sales next year.

Wall Street rallies on bets for divided U.S. Congress, Fed holds steady
 

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Comments (19)
Pat Mathieu
Pat Mathieu Nov 06, 2020 1:03PM ET
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It's funnyvhow Covid has completely disappeared from the media's Narrative since Wednesday.
Binod Kumar shah
Binod Kumar shah Nov 05, 2020 12:34PM ET
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Rahul
Victor Asturias
Victor Asturias Nov 05, 2020 12:07PM ET
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Covid, unemployment and an election tie, a worst posible scenario yet markets rally up, alright 🤷🏻‍♂️
taylor jason
taylor jason Nov 05, 2020 12:07PM ET
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you just don't understand
taylor jason
taylor jason Nov 05, 2020 12:07PM ET
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you looking at all the wrong way way; rates are 0, inflation is low, credit spreads are narrow, more stimulus inbound, and republican controlled senate all point to higher
Eloy Rodrigo
Eloy Rodrigo Nov 05, 2020 11:59AM ET
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if Biden gets presidency and Republicans the Congress I bet that it won't have any other stimulus package.Let's see it.
carol ruszin
carol ruszin Nov 05, 2020 11:59AM ET
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Only if Republicans stop the bill.
Michael Angelo
Michael Angelo Nov 05, 2020 11:56AM ET
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I don't know how people on this website is doing and really, don't care about opinions or conspiracy theories. The only certain thing I know is that Bezzos sold 3 billons cash of Amazon. Last time was August. That's all. Have a great day.
Jesse Mulliniks
Jesse Mulliniks Nov 05, 2020 11:55AM ET
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But i thougnt if we elected biden our 401ks were going to crash?
Mitchel Pioneer
Mitchel Pioneer Nov 05, 2020 11:36AM ET
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Wall Street rallies because it's a fraudulent, criminally manipulated Ponzi scheme.
Steven Steven
Steven Steven Nov 05, 2020 11:31AM ET
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Lock your profit while can, no clear policies out yet from Biden. To early to celebrate.
Ali Scander
Ali Scander Nov 05, 2020 11:29AM ET
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Market might tank soon.
Bret Lafrance
Bret Lafrance Nov 05, 2020 10:26AM ET
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Last week a sweep was good news. Reuters is such a shill.
Kaveh Sun
Kaveh Sun Nov 05, 2020 10:02AM ET
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Biden will unblock China. Congress cant roll back Trump tax cut. This is heaven for international companies.
Dietmar Stahl
Dietmar Stahl Nov 05, 2020 8:15AM ET
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If that Biden guy wins better invest in China. US will only have Hugh debts and no jobs. All the jobs will go to China.
Amy Carbob
Amy Carbob Nov 05, 2020 8:15AM ET
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You should have been investing in asia and pacific already just based on the success of their covid response .
Bret Lafrance
Bret Lafrance Nov 05, 2020 8:15AM ET
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Nonsense. Do you have eyes. Imports from China are up, exports are down?
Limin Tandiono
Limin Tandiono Nov 05, 2020 8:15AM ET
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Amy Carbob Absolutely true
Limin Tandiono
Limin Tandiono Nov 05, 2020 8:15AM ET
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The future is in the east.
Dietmar Stahl
Dietmar Stahl Nov 05, 2020 8:00AM ET
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21 new Tax laws. Take your money and run fast.
Kaveh Sun
Kaveh Sun Nov 05, 2020 8:00AM ET
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Rep is holding the senate. They wont pass any new tax law.
Joe Alanis
Joe Alanis Nov 05, 2020 8:00AM ET
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It will cost the Dems more then their willing to give.
Rick Baier
Rick Baier Nov 05, 2020 7:23AM ET
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How can there be more votes collected than actual registered voters in Wisconsin? I don't care what side of the isle your on this is just unacceptable.
Matt Rustad
Matt Rustad Nov 05, 2020 7:23AM ET
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There isnt. You should look it up yourself instead of reading tweets for your information.
Adam Arndt
Adam Arndt Nov 05, 2020 7:23AM ET
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“According to the Wisconsin Election Commission, the “State of Wisconsin had 3,684,726 active registered voters on November 1, 2020.”The guy who reported on twitter that there were only 3,129,000 registered voters in Wisconsin is clearly terrible at reading comprehension as that was the number of registered voters for Wisconsin’s 2018 midterms...https://ballotpedia.org/Voter_registration
Adam Arndt
Adam Arndt Nov 05, 2020 7:23AM ET
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So there’s NOT more votes than registered voters.
Sharath K S
Sharath K S Nov 05, 2020 6:14AM ET
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Some narrative to markets high. If it had tanked, same would have sounded negative
justin namon
justin namon Nov 05, 2020 5:12AM ET
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Good one...
Samui Lo
Samui Lo Nov 05, 2020 4:44AM ET
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Biden win and democrat senate signals more "stimulus" Gridlock signals "less regulation" Trump won signals "less taxes"... everything and it's opposite is a bullish signal in algo world
katya litski
katya litski Nov 05, 2020 4:23AM ET
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im selling today. lol. crazy
Amine Fourali
Amine Fourali Nov 05, 2020 3:50AM ET
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I thought this was already factored in! Lol...
 
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