Led by the tech-heavy Nasdaq, US stock indexes rose Wednesday after a tumultuous election night. E-mini Nasdaq futures soared more than 5% during Wednesday’s session, followed by the Dow and S&P 500, on pace for its best day in over 6 months.
And all the while the US Presidential election is not only still too early to call, but there is uncertainty as to when a winner will be determined.
Why Are Markets Up?
According to some analysts, the gains are a result of markets accepting a divide between Democrats and Republicans.
“The first information that people are digesting is that a split government is OK, and we can deal with this. No big changes are expected anytime soon on the policy side,” claimed Melda Mergen, Global Head of Equities at a private investment firm, rationalizing the market’s optimistic reaction.
Another factor buoying markets is investor confidence in the technology sector. Over the course of the coronavirus pandemic, investors & speculators alike have progressively viewed tech companies as safer bets since they are largely online-based and less in need of economic stimulus than other companies.
As a result, Nasdaq futures rose nearly 2% more than the other indexes. Microsoft (MSFT), Amazon (AMZN), Facebook (FB) and Google (GOOGL) all climbed more than 5% Wednesday.
What About the Fed Meeting?
Amidst the election bustle, the Federal Open Market Committee (FOMC) is also due to conclude a policy-setting meeting tomorrow. However, little is expected from the Fed’s announcement Thursday at 2pm ET.
With Covid cases on the rise globally and uncertainty surrounding the conclusion of the election, Fed policymakers will likely defer to December’s meeting for further action.
Election Night Price Action
Looking at E-mini Nasdaq futures, the bulls came out of the gate right at yesterday’s open and pushed prices higher before a period of accumulation as the US session came to an end. Another sharp rise was seen once election results started coming in and price has risen steadily since retesting the 11,300 level.