- Dow jumps 1.5% on Thursday as Republicans likely to retain control of the U.S. Senate.
- NBC News projected Biden’s victory in Michigan and Wisconsin late on Wednesday.
- A contested election could see a sharp decline in the stock market in the short term.
The Dow Jones Industrial Average jumped 423 points or 1.5% on market open as investors expected on Thursday that the new president of the United States will be announced soon. On the intraday chart, Nasdaq Composite was also about 1.8% up on Thursday, and the benchmark S&P 500 index gained 1.6%.
The three major Wall Street indices are now on course to record their best weekly performance since April. Nasdaq has rallied 8.2% this week so far. S&P 500 has gained 7.1%, while the Dow Jones is over 6% up week to date.
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NBC projects Biden’s victory in Michigan and Wisconsin
NBC News projected late on Wednesday that Democrat Joe Biden secured victory in Michigan and Wisconsin. President Donald Trump had won both of these states against Hillary Clinton in the presidential election of 2016.
The stock market built on Wednesday’s rally that had ended with DJIA up 1.3%, S&P 2.2%, and Nasdaq 3.9%, as Republicans inched closer to retaining majority in the U.S. Senate, which would make it difficult for Biden’s administration to get approval for major policy changes that could affect corporate America. According to Commonwealth Financial Network’s McMillan:
“With no blue wave, we are likely to see the Senate remain very closely divided, which will constrain the policy options of whoever wins the presidency. That probably rules out any substantial activity on taxes, as well as limiting any actions to control the major tech firms.”
The 2020 U.S. presidential elections saw record voter turnout and an increase in absentee ballots as many voters opted to stay home due to the ongoing Coronavirus pandemic. Trump’s campaign said it was filing a lawsuit on Wednesday to halt ballot counting in Pennsylvania and Michigan.
Trump campaign demands a recount in Wisconsin
President Donald Trump has demanded a recount in Wisconsin and sued in Georgia to require all counties to separate legally cast ballots from ones that received after the voting deadline. U.S stock futures jumped on Thursday as Biden got closer to becoming the next president of the United States.
In the event of a contested election – a prospect that remains on the table, the stock market could tumble sharply in the short-term. Chief Investment Officer Don Calcagni of Mercer Advisors said on Thursday:
“More than anything, the market is looking for a peaceful transition of power. Social unrest or a contested election could trigger a significant increase in volatility.”