Wall Street Rallies, Draws Comfort from Divided US Congress as Vote Counting Continues

Wall Street’s main indexes jumped on Thursday as investors bet on a Republican-held Senate that would block any moves by a Joe Biden administration to tighten regulation and raise taxes on corporate America, even as the presidential election remained too close to call.

The tech-heavy Nasdaq gained 2.7% and was within striking distance of it Sept. 2 record closing high.

The Philadelphia SE semiconductor index surged 4.1% to hit its own all-time high, while technology and communication services led gainers among S&P indexes.

The materials index also hit a record high, boosted by a 7.6% rise in shares of U.S.-German industrial gas producer Linde after it raised its expectations for full-year earnings.

With President Donald Trump and his Democrat rival Biden still awaiting clarity from the battleground states expected to decide the election, investors were returning to the core setting of the past decade: buying stocks with the flood of extra monetary stimulus coursing through the financial system.

Biden edged closer to victory in the race for the White House on Thursday after winning Michigan and Wisconsin, but Democrats appeared unlikely to win the Senate, potentially making it difficult for a Democrat administration to rein in Big Tech and other businesses.

“Markets prefer divided government,” said Brian Levitt, Invesco global market strategist.

“Incessant hand wringing over the key issues and concerns over the prospects of higher taxes, a Green New Deal, changes to the Affordable Care Act and much more appears to have been for naught.”

Shares of technology mega-caps including Apple Inc, Amazon.com Inc and Alphabet Corp, this year’s big “stay-at-home” gainers from coronavirus lockdowns, added to strong gains from Wednesday.

The VIX volatility index, which has risen in recent months as investors feared the vote might spark falls in shares, retreated to its lowest in three weeks.

Renewable energy, infrastructure, marijuana and trade-sensitive stocks, which analysts have identified as winning under a Biden administration, rebounded after underperforming in the previous session.

But investors also sought the safety of bonds as the prospect of a divided Congress dented expectations of a bumper fiscal stimulus package that is critical to supporting a damaged U.S. economy. Coronavirus risks also grew with new U.S. infections setting a daily record.

Attention later in the day will be on the Federal Reserve’s latest policy statement after a two-day meeting, but with the final result of the election still uncertain, the central bank is expected to repeat its pledge to do whatever it can to help the economy.

At 10:21 a.m. ET, the Dow Jones Industrial Average was up 2.29%, the S&P 500 was up 2.47% and the Nasdaq Composite was up 2.66%.

Qualcomm Inc surged 14.2% after the chipmaker forecast fiscal first-quarter revenue above estimates as it predicted solid growth in 5G smart phones sales next year.

Advancing issues outnumbered decliners 7.14-to-1 on the NYSE and 3.21-to-1 on the Nasdaq.

The S&P index recorded 60 new 52-week highs and no new low, while the Nasdaq recorded 118 new highs and 14 new lows.

Read all the Latest News, Breaking News and Coronavirus News here