Stocks Keep Rising

By Nicholas Jasinski |  Thursday, November 5 Bullish Gridlock. Stocks rose for the fourth-straight day today. Investors looked past the continuing vote counts under way in several states, and toward a potential Joseph Biden presidency with a divided Congress. Split control of Washington has become the consensus expectation on Wall Street, and an outcome that investors can get comfortable with. The S&P 500 and the Dow Jones Industrial Average each gained 1.9% today, and are up more than 7% this week. A good day for technology shares boosted the Nasdaq Composite 2.6%. That index is up roughly 9% since the weekend. Analysts and strategists see a Democratic White House and House of Representatives, paired with a Republican Senate, slowing down the political process on issues that are potentially damaging to stock valuations. Those include antitrust legislation (Big Tech shares were up big today) or a higher corporate tax rate. On the other hand, a divided Congress could potentially mean a smaller fiscal stimulus package meant to offset the economic damage of the pandemic. That expectation has put pressure on bond yields this week, as stocks have climbed. Usually bonds yields rise (and prices fall) when stocks climb. But lower stimulus odds decrease economic growth and inflation expectations, and could mean less U.S. government borrowing. That has pushed the yield on the 10-year U.S. Treasury note down to 0.78%, from 0.85% to start the week. It's a small absolute difference, but a big move for the Treasury market.  Back in the stock market, banks and infrastructure plays have been among the relative laggards this week. Those would be beneficiaries of higher rates and fiscal stimulus, respectively. Investors also looked past record coronavirus cases in the U.S. and other parts of the world, and the associated economic restrictions imposed by governments to slow the virus’ spread. New confirmed cases in the U.S. surpassed 100,000 yesterday. Third-quarter earnings continued today, with results from 47 S&P 500 firms and dozens of small and mid-cap companies. Reporters included Alibaba Group Holding, AstraZeneca, Barrick Gold, Bristol Myers Squibb, Discovery, Electronic Arts, General Motors, Peloton Interactive, Regeneron Pharmaceuticals, T-Mobile US, Take-Two Interactive Software, Uber Technologies, Virgin Galactic, and Zoetis.

 

DJIA: +1.95% to 28,390.18 S&P 500: +1.95% to 3,510.45 Nasdaq: +2.59% to 11,890.93 The Hot Stock: Albemarle +12.9% The Biggest Loser: Hanesbrands -18.6% Best Sector: Materials +4.1% Worst Sector: Energy 0.0%