Stocks jumped on Thursday on hopes the winner of the U.S. presidential election would soon be determined.
The Dow Jones Industrial Average traded 423 points, or 1.5%. The S&P 500 climbed 1.6% and the Nasdaq Composite advanced 1.8%.
Those gains put the major averages on pace for their biggest weekly gains since April. The Dow was up more than 6% week to date. The S&P 500 and Nasdaq were up 7.1% and 8.2%, respectively, over that time period.
Late Wednesday, NBC News projected that former Vice President Joe Biden was the winner in Wisconsin and Michigan, both states that President Donald Trump won in the 2016 presidential election. Biden would then be just 17 Electoral College votes away from winning, NBC News reported Wednesday.
“Markets are reacting very positively to the fact that a great deal of the election uncertainty has passed. Not all of it, but at least the worst outcomes seem 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 with the presidential vote unclear, stocks rose broadly during Wednesday’s trading session as hopes for a blue wave in Congress dwindled, which some argued would have been a headwind for areas of the market including Big Tech.
The Dow finished Wednesday’s session with a gain of 367.63 points, or 1.3%. At its session high, the 30-stock average gained 821 points. The S&P 500 advanced 2.2%, while the Nasdaq Composite jumped 3.9%.
“It looks likely that we’ll see a split Congress, which, based on history, has been the preference of the stock market,” said Lindsey Bell, chief investment strategist at Ally Invest. “You can see this expectation being priced into the market [Wednesday] with health care, communication services and technology stocks are leading the market.”
U.S. equities’ surge came despite the election results remaining up in the air following record voter turnout, as well as a jump in absentee ballots as people stayed home amid a spike in Covid-19 cases.
The Trump campaign said it would seek a recount in Wisconsin, while earlier on Wednesday announcing that it was suing to halt ballot counting in Michigan and Pennsylvania. Late Wednesday, the campaign also said it had filed suit in Georgia seeking to require all counties there to separate ballots that arrive after the voting deadline from other, “legally cast ballots.”
Trump on Wednesday night tried to falsely claim victory in Pennsylvania, Georgia, North Carolina and Michigan. NBC News has yet to call the battleground states of Pennsylvania, Georgia and North Carolina. Trump’s comments followed his declaration in the early hours of Wednesday that he had won the race, despite the fact that millions of votes had not been counted.
Late Wednesday afternoon, Biden said in a speech delivered in Wilmington, Delaware that he expected to win the election. The Democratic nominee’s comments followed remarks by his campaign manager Jen O’Malley that Biden would be “the next president of the United States.”
Meanwhile, the Democrats were projected to retain control of the House, while flipping the Senate became increasingly unlikely.
“With no blue wave, we are likely to see the Senate remain very closely divided, which will constrain the policy options of whoever wins the presidency. That probably rules out any substantial activity on taxes, as well as limiting any actions to control the major tech firms,” Commonwealth Financial Network’s McMillan added.
However, some strategists noted that a contested election, which is not off the table at this point, could lead to a sharp drop in stocks over the short-term.
“More than anything, the market is looking for a peaceful transition of power. Social unrest or a contested election could trigger a significant increase in volatility,” said Don Calcagni, chief investment officer of Mercer Advisors.
Sentiment on Thursday also got a boost from better-than-expected earnings out of Qualcomm and General Motors. Qualcomm’s stock popped more than 11%. General Motors shares gained 3.4%.
Investors also awaited the latest monetary policy announcement from the Federal Reserve. The central bank is expected to keep overnight rates near zero and to reiterate the need for more fiscal stimulus as the economy continues its recovery from the coronavirus pandemic.
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