Political chaos? You'd never have guessed it by the stock market's response Wednesday to the presidential election, which indeed has still not been decided. Investors who slept in after a long night of election-watching woke up with considerably more money in their portfolios than they went to sleep with.
The Dow Jones Industrial Average gained 1.3% to 27,847, though late profit-taking cut the Dow's haul by more than half. The S&P 500 enjoyed one of its best post-election gains ever, jumping 2.2% to 3,443.
And the Nasdaq Composite was the most resilient of the blue-chip indices, hanging on for a 3.9% improvement to 11,590 thanks to the likes of Amazon.com (AMZN, +6.3%), Facebook (FB, +8.3%) and Google parent Alphabet (GOOGL, +6.1%).
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"One of the big takeaways so far from Tuesday night is that the Senate likely will stay Republican, meaning we may have a divided Congress," says Ryan Detrick, chief market strategist for LPL Financial. "The chances of higher taxes and more regulation likely took a hit under this scenario. This could be a nice tailwind for stocks, as the S&P 500 historically has done quite well under a divided Congress, up more than 17% on average.
"Additionally, in years with a divided Congress, stocks have been higher the past 10 times, with 2020 potentially being the 11th in a row.
Other action in the stock market today:
- The Russell 2000 was virtually flat, gaining less than one point to 1,615.
- U.S. crude oil futures jumped 4.1% to $39.18 per barrel.
- Gold futures were off 0.7% to $1,896.20 per ounce.
Who Wins, Who Loses?
But Wednesday wasn't an across-the-board rally -- there were big winners and big losers.
Bank stocks, as measured by the SPDR S&P Bank ETF (KBE), dropped 5.4% today as interest rates plunged, while energy (+0.1%) crawled and materials (-1.7%) struggled on fears of a diminished federal stimulus package from a divided government.
However, healthcare stocks such as UnitedHealth Group (UNH, +10.3%) and Merck (MRK, +4.8%) soared in response to Joe Biden's slim lead, given the potential for less uncertainty around health care policy.
And, as mentioned earlier, technology and tech-esque stocks had a field day today. But why?
"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," says Brad McMillan, chief investment officer for Commonwealth Financial Network. "That probably rules out any substantial activity on taxes, as well as limiting any actions to control the major tech firms."
The race is, of course, not over -- certainly not as of this writing -- so the winds could change yet again. And if there's no holding back tech, you should probably be investing in it. Investors preferring a diversified, lower-risk approach might want to consider these 15 technology ETFs, which allow you to invest in the sector more broadly, or across narrower industries and even "themes."
Or, if you can handle more risk, you can shoot for more robust returns via these seven small-cap technology companies that Wall Street is wild about right now.
Kyle Woodley was long AMZN and FB as of this writing.
-
Beyond Banking: How Credit Unions Serve Their CommunitiesCredit unions differentiate themselves from traditional banks by operating as member-owned financial cooperatives focused on community support and service rather than shareholder profit.
-
Don't Toss It! Why Your Medicare Annual Notice of Change MattersIf you have Medicare Part D or a Medicare Advantage plan, reviewing your Annual Notice of Change is crucial. It can save you money and ensure you can still see your preferred doctors and hospitals.
-
Stocks Grind Up to New All-Time Highs: Stock Market TodayUnitedHealth stock led the Dow Jones Industrial Average amid increasing signs the labor market has not been well for months.
-
Markets Prepare for August Inflation Data: Stock Market TodayApple CEO Tim Cook is still important, but price action this week is as much about incoming inflation data ahead of next week's Fed meeting.
-
Big Tech Names Rise Above Broad Weakness: Stock Market TodaySome familiar names enjoyed solid rallies on the resolution of outstanding questions, but macro uncertainty hangs over the broader market.
-
Alphabet Stock Pops After Google Antitrust Ruling: What to KnowGOOGL stock is soaring Wednesday after a judge ruled that Alphabet does not have to divest its Chrome browser.
-
If You'd Put $1,000 Into Sherwin-Williams Stock 20 Years Ago, Here's What You'd Have TodaySherwin-Williams stock has clobbered the broader market by a wide margin for a long time.
-
AI Start-ups Are Rolling in CashThe Kiplinger Letter Investors are plowing record sums of money into artificial intelligence start-ups. Even as sales grow swiftly, losses are piling up for AI firms.
-
If You'd Put $1,000 Into UnitedHealth Group Stock 20 Years Ago, Here's What You'd Have TodayUNH stock was a massive market beater for ages — until it wasn't.
-
Stocks Struggle to Start Nvidia Week: Stock Market TodayAnother important week for the stock market starts on a risk-off note.
