Investors are desperate for a comprehensive stimulus deal, and a win for Joe Biden could be the only way to get it.
A day before Election Day, United States stocks finished higher than last week. This is largely because Wall Street predicts Joe Biden will win the White House, CNN reports. While stocks are more likely to favor policies established by the Republican Party, there has been a dearth of financial stimuli. A Biden presidency would thus be a welcome change of pace, particularly amidst the ongoing public health crisis. Wall Street also forecasts fewer risks in the next four years should a blue wave overtake the country. There is no doubt that Americans have been searching for a sense of stability, and stock prices are no different.
On Monday, stocks closed high. They opened sharply higher before experiencing some volatility and pairing gains. Key stock indicators include The Dow (INDU), which closed up 1.6%, or 423 points, after gaining over 500 points at its high point, and the broader S&P 500 (SPX), which finished 1.2% higher. The Nasdaq Composite (COMP), on the other hand, had a more erratic trading day. It turned red after opening sharply higher but covered some ground right before the market closed; the index finished up 0.4%. Ultimately, these numbers are good news as all three benchmarks recovered some of their losses from last week, which was the worst recorded since March this year.
Financial experts believe that these numbers could indicate Wall Street's predictions of Presidential election results. As the number of Coronavirus cases in the US continues to soar, investors are eager for a fiscal stimulus package—one that they believe could be pioneered by Democratic candidate Biden. Andy Laperriere and Don Schneider at Cornerstone Macro stated, "If the polls are roughly right, Joe Biden is going to win the election comfortably and we will know that before midnight tomorrow." If the polls are wrong, they claimed the "evidence is still pointing to a Biden victory." In addition to a win for blue in the White House, Senate elections will prove to be immensely important.
Citi economist Andrew Hollenhorst affirmed in a note to clients that "the Senate outcome is important for the trajectory of fiscal policy." Neither party, nonetheless, is likely to gain a majority immune to filibusters. This would mean bipartisan cooperation will still be necessary to pass a comprehensive stimulus deal in the winter. He added, "Under any election scenario we expect a $1.5 trillion-plus fiscal package, possibly as early as just post-election."
Wall Street is particularly wanting for such a bill as Congress has not passed one since the summer. As the effects of the CARES Act run out, the US economy needs intense help getting back on its feet. Meanwhile, thousands of Americans are at present relying on government benefits in order to simply make ends meet. This is not good news, as the country's economy relies largely on consumer spending. Goldman Sachs analysts predict consumer spending to decline in the coming months because of a resurgence in the pandemic. Moreover, a stimulus package is unlikely to come into effect prior to 2021. The economy's improvements have so far been unsteady, but a win for Biden could get the US back on track, as experts indicate.
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