US stocks staged a strong Election Day rally on Tuesday as Wall Street bet that whoever wins the White House will give the pandemic-battered economy another cash infusion.
The Dow Jones industrial average surged as much as 688.05 points, or 2.5 percent, to 27,613.10 following 423-point jump on Monday, helping the blue-chip index claw back a big chunk of the 1,834 points it shed last week amid a nationwide surge in coronavirus infections.
The benchmark S&P 500 advanced as much as about 2.4 percent while the tech-heavy Nasdaq climbed roughly 2.3 percent, putting all three major indexes on pace for their second straight day of gains.
Helping fuel the broad-based rally in the final stretch of a heated election cycle were hopes that either President Trump or Joe Biden will deliver another large stimulus package to staunch the economic bleeding from the coronavirus pandemic — something investors have spent weeks clamoring for.
“It’s all about the Benjamins, and that’s what is getting the market excited,” Ryan Giannotto, director of research at GraniteShares, told The Post. “Unless it emerges into a full blown constitutional succession crisis, which in the grand scheme of things is relatively unlikely, the path to stimulus only narrows.”
While stimulus talks in Washington have been at a logjam for weeks, market observers contend that congressional leaders and the White House won’t have to worry so much about the political consequences of reaching a deal once the election is finally over.
Some on Wall Street appeared to be betting on a Democratic sweep that would turn the Senate blue and allow Biden to quickly sign a sizable spending bill once he takes office. The former vice president has led Trump in recent national polls but the race is tighter in key battleground states.
“There is a lot of money sitting on the sidelines waxing their surfboards, getting ready to ride the Blue Wave tsunami,” said Stephen Innes, chief global market strategist at Axi. “That would mean a massive stimulus package that could reignite the risk-on mood, at least in the short term.”
But experts say any bump in stock prices from a Biden victory would likely be short-lived, given that Democrats would seek to raise taxes on the rich and impose stricter regulations than the Trump administration.
Tuesday’s rally also came after the worst week for stocks in months as a resurgence of COVID-19 cases sparked fears about renewed lockdowns spreading from the Europe to the US.
Some investors may have been taking advantage of the low share prices now that one of the riskiest events hanging over the market is nearly over, according to Jim Paulsen, chief investment strategist at the Leuthold Group.
“I think it’s more about, ‘We’re finally going get through this,’” Paulsen told The Post. “Even if it’s contested and drags on while, that will create some shock for a couple days, [but] I think people have already discounted that too and thought it through.”
The election is just the start of a busy financial and economic calendar this week. The Federal Reserve will hold its monthly meeting Wednesday and Thursday, followed by the closely watched October jobs report on Friday.
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