Dow jumps 1.5% on Thursday as the Republicans are likely to retain control of the US Senate.
NBC News predicted Biden’s victory in Michigan and Wisconsin late Wednesday.
A contested election could lead to a sharp drop in the stock market in the short term.
The Dow Jones industry average rose 423 points or 1.5% when markets opened, as investors expected the new president of the United States to be announced soon on Thursday. On the intraday chart, the Nasdaq Composite was also up about 1.8% on Thursday, and the S&P 500 benchmark rose 1.6%.
The three major Wall Street indices are now on track to achieve their best weekly performance since April. The Nasdaq has gained 8.2% this week so far. The S&P 500 was up 7.1%, while the Dow Jones was up over 6% this week.
NBC forecasts Biden’s victory in Michigan and Wisconsin
NBC News predicted late Wednesday that Democrat Joe Biden had secured victory in Michigan and Wisconsin. President Donald Trump had won these two states against Hillary Clinton in the 2016 presidential election.
The stock market built on Wednesday’s rally, which ended with the DJIA up 1.3%, the S&P up 2.2% and the Nasdaq up 3.9% as the Republicans moved closer and closer to maintaining a majority in the U.S. Senate, making it difficult for Biden’s administration to gain approval for major policy changes that could impact corporate America. According to McMillan of the Commonwealth Financial Network
“If there is no blue wave, we will probably see the Senate remain very narrowly divided, which will limit the political options of whoever wins the presidency. This probably excludes any substantial activity in the tax area and also restricts any measures to control the large technology companies.
The 2020 U.S. presidential election saw record voter turnout and an increase in absentee ballots as many voters chose to stay at home due to the ongoing coronavirus pandemic. Trump’s campaign said it would file a lawsuit on Wednesday to stop the counting of ballots in Pennsylvania and Michigan.
Trump’s campaign calls for a recount in Wisconsin
President Donald Trump has called for a recount in Wisconsin and sued in Georgia to require all counties to separate the legally cast ballots from those received after the voting deadline. U.S. stock futures soared on Thursday as Biden was closer to becoming the next president of the United States.
In the event of a contested election – a prospect that remains on the table – the stock market could plummet in the short term. Chief Investment Officer Don Calcagni of Mercer Advisors said on Thursday
“More than anything else, the market is looking for a peaceful transition of power. Social unrest or a controversial election could trigger a significant increase in volatility”.