US stock index futures spun overnight on Wednesday as investors hoped the winner of the US presidential election would soon be determined.
Futures contracts linked to the Dow Jones Industrial Average lose 21 points after initially moving higher. S&P 500 futures were slightly lower, while Nasdaq 100 futures were up 0.3%.
Late Wednesday, NBC News predicted that former Vice President Joe Biden would be the winner in Wisconsin and Michigan. Both states won President Donald Trump in the 2016 presidential election. Biden would then be only 17 votes away from the electoral college, NBC News reported on Wednesday.
"Markets are very positive about the fact that much of the election uncertainty is over. Not all, but at least the worst outcomes, appear to have been avoided. Markets hate uncertainty and this is likely to be a tailwind for a while," said Brad McMillan, Chief Investment Officer at Commonwealth Financial Network.
Even if the president-elect was unclear, stocks rose sharply during Wednesday's trading session as hopes of a blue wave in Congress faded, which some believe would have been a headwind for areas of the market like big tech.
"It is likely that we will see a divided convention which, based on history, has been the stock market bias," said Lindsey Bell, chief investment strategist at Ally Invest. "You can see that expectation will be launched [Wednesday] as healthcare, communications services and technology stocks lead the way."
On Wednesday, the Dow ended the session up 367.63 points, or 1.3%. At its session high, the 30-stock average gained 821 points. The S&P 500 was up 2.2%, while the Nasdaq Composite was up 3.9%.
The surge in U.S. stocks came despite election results that remained in the air after the record turnout, as well as a surge in postal votes as people on Covid-19 cases stayed home amid a surge.
The Trump campaign said it would seek a recount in Wisconsin while on Wednesday it announced it would be sued to stop voting in Michigan and Pennsylvania.
Trump mistakenly tried to claim victory in Pennsylvania, Georgia, North Carolina and Michigan on Wednesday night. NBC News hasn't called the battlefield states of Pennsylvania, Georgia, and North Carolina yet. Trump's comments followed his statement in the early hours of Wednesday that he had won the race despite millions of votes not being counted.
Late on Wednesday afternoon, Biden said in a speech in Wilmington, Delaware that he expected to win the election. The Democratic candidate's comments followed the remarks made by his campaign manager Jen O & # 39; Malley that Biden would be "the next President of the United States".
In the meantime, the Democrats were supposed to keep control of the House as the Senate became increasingly unlikely to turn over.
"Without a blue wave, we will likely see the Senate remain very tightly divided, which will limit the policy options of those who win the presidency. This will likely preclude any substantial tax activity and limit any action taken to control the major Technology firms, "added McMillan of the Commonwealth Financial Network. Facebook gained 8.3% on Wednesday, while Amazon and Alphabet both gained more than 6%. Apple and Netflix rose 4% and 2%, respectively.
However, some strategists noted that a controversial choice, which is not off the table at this point, could lead to a sharp drop in stocks in the short term.
"The main goal of the market is a peaceful transfer of power. Social unrest or controversial elections could add significant volatility," said Don Calcagni, chief investment officer of Mercer Advisors.
Senate Majority Leader Mitch McConnell said Wednesday that passing further incentives will be a top priority at reunification, despite analysts warning that without a blue wave, the package will be smaller than the $ 3 trillion Democrats were looking for had.
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