Dow pops 650 points on Election Day, as Wall Street extends rally
U.S. markets jumped at the open on Election Day, as investors expressed optimism that a clear winner would emerge in the presidential race, fanning hopes for economic stimulus.
Tumult reigned in trading last week, with U.S. indexes notching their worst week since March as the U.S. shattered records for new coronavirus cases and several European nations reintroduced lockdowns. But on Tuesday, the markets are poised to build on Monday's gains, as upbeat investors react to projections of a Blue Wave, Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said in comments emailed to The Post.
"Currently the consensus is that a Blue Wave (Democrats hold the House and win the Senate and White House) scenario will lead to a much larger stimulus package next year," Zaccarelli wrote, "which would be good for the stock market in the short run, despite the fact that it will also lead to higher corporate and personal income taxes."
For the first time in history, most Americans cast their ballots before Election Day. The massive increase in early and mail voting, with many voters seeking to avoid crowded polling places, has reshaped how and when most ballots are counted, creating uncertainty around when results will be known. According to The Washington Post's average of national polls, Democratic nominee Joe Biden leads President Trump 52% to 42%. The former vice president holds a bigger lead than Hillary Clinton had in 2016, before her surprise loss to Trump.
Shortly after open, the Dow Jones industrial average was up more than 650 points, or 2.4%, at 27,581. The S&P 500 index had risen 2.2% to 3,383. The tech-heavy Nasdaq 100 - battered by the recent steep sell-offs in Big Tech - rose 2.0% to 11,180.
The optimism was shared overseas. Asian markets all closed in positive territory, with Hong Kong's Hang Seng Index and the Australian ASX 200 both gaining nearly 2%. Japan's Nikkei 225 and the Shanghai Composite index both climbed about 1.4%. In midday trading, European indices were all positive, led by France's CAC and Britain's FTSE 100, which were both up 2.1%.
"It's a firm risk-on mood for investors as equities rise across Europe and Asia," Russ Mould, investment director at AJ Bell, said in Tuesday comments emailed to The Post. "Investors seem to be pricing in a victory by Joe Biden in the US Presidential Election and anticipation is high that he will have a more favorable trade policy with China and the EU."
Investor ease was reflected in the yield on the 10-year U.S. Treasury note, which edged up to 0.878% Tuesday morning, nearing its highest level since June as investors seek out riskier territory. Bond yields move inversely to prices.
Even oil markets, which have been choppy as renewed movement restrictions spur fears of wider lockdowns, were steady Tuesday. Brent crude, the international oil benchmark, was trading up 3.2% at $40.23 per barrel. West Texas Intermediate crude, the U.S. oil benchmark, was trading up 3.6% at $38.13 per barrel.
The rally reflects a hunger for change amid the ongoing public health crisis and the uneven economic recovery, Chris Rupkey, chief financial economist at MUFG Union Bank, said Tuesday in comments emailed to The Post.
"History is repeating itself where four years ago, the Dow industrials rallied Monday and Tuesday into the presidential election on November 8, and now stocks are up Monday and Tuesday again this year before the election results start to trickle out after the close of trading today," Rupkey wrote. "Stocks are rallying today in hopes of a better tomorrow."
On Sunday, the U.S. Centers for Disease Control and Prevention published guidance saying people who are in isolation after testing positive can still cast ballots in person.
"Voters have the right to vote, regardless of whether they are sick or in quarantine," the CDC says on their website. Under federal law, turning someone away from a polling site is considered illegal and an act of voter intimidation.
The guideline could add another layer of tension for those voting in person on Election Day, as some states prepare the National Guard for potential post-election unrest. The surge of voters to the polls Tuesday comes amid what one top health official called "the most concerning and most deadly phase" of a the coronavirus pandemic. The virus has already claimed at least 230,000 American lives, and record numbers of coronavirus-related hospitalizations are straining hospitals in rural states.
