The former vice president won after his expected victory in Pennsylvania and Nevada, according to projections by NBC News on Saturday. The call came four days after Election Day and amid tight counts in several battlefield states.
Wall Street hoped the call would reduce the chances of a prolonged election fight, even if Trump refused to concede. Many traders had bet on market volatility in November and were unwinding these positions, helping fuel a rally.
In the meantime, the chances of a “blue wave” dragging Democrats into the Senate and House majority have diminished, meaning drastic policy changes such as tax hikes are less likely.
“A Biden presidency with a Republican Senate would likely see no tax increase, which was arguably the biggest fear investors had about a Biden presidency,” Brian Levitt, global market strategist at Invesco, said Sunday. “And a Biden presidency could mean a return to a more traditional and predictable approach to trade policy, which would likely result in less volatile markets. ”
Democrats are expected to retain their majority in the House, although Wall Street is keeping a close watch on Senate scrutiny still in limbo. The two Georgian Senate races are likely to take place in the second round in early January.
Wall Street rallied last week in anticipation of such a stalled government and was poised to build on that rally as it gained clarity in the presidential race. The three big averages have just landed their best weekly performance since April. The S&P 500 and Nasdaq jumped 7.3% and 9%, respectively, last week, while the Dow Jones rose 6.9%. The S&P 500 also posted its biggest election week gain since 1932.
Technology was the biggest winner last week among the 11 sectors of the S&P 500, up 9.7%. Investors crammed into the high-growth group as the prospect of higher taxes and tighter regulation in a Democratic sweep diminished.
Trump rejects the result
Stock futures have won even as Trump refuses to concede the election, swearing that as of Monday his team will begin “taking our case to court to ensure election laws are fully respected.”
The president and his surrogates have launched lawsuits in several key states, including Pennsylvania and Michigan, and have signaled that they plan to push for recounts in some tight races.
Biden is expected to announce members of his coronavirus task force on Monday, who will be tasked with developing a plan to curb the spread of the coronavirus as it hits record levels.
The United States has reported more than 126,000 new cases of coronavirus two days in a row and has reported a new record daily spike in cases every day for the past four days, according to data compiled by Johns Hopkins University.
“As the election target begins to wane, investors will start to pay more attention to Covid as cases continue to explode and Europe puts in place a series of mitigation measures,” said Adam Crisafulli, founder of Vital Knowledge, on Sunday. “Anticipation of vaccines has helped protect stocks from ugly virus stocks.”
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