Stock Market Today: Stocks Soar on Status Quo

The increasing likelihood of the federal government remaining split between Democrats and Republicans suited most traders just fine.

(Image credit: Getty Images)

The outcome of the presidential election remained uncertain during Thursday's session, and traders celebrated by pushing stocks to near 52-week highs.

Challenger Joe Biden's lead over President Trump -- and the Democrats' likely failure to seize control of the Senate -- was the proximate cause for jubilation, thanks to the prospect of a divided government. It's an old saying on Wall Street that the best government is a divided government because nothing much that threatens corporate profits can get done.

The likelihood of a divided government is especially pleasing to investors in the nation's biggest tech companies, which otherwise might have been targeted for sweeping new regulations or even broken up altogether. Apple (AAPL (opens in new tab)), Microsoft (MSFT (opens in new tab)), Facebook (FB (opens in new tab)) and (AMZN (opens in new tab)) all rallied at least 2.5% to help the tech-heavy Nasdaq Composite lead the major indexes higher with a 2.6% gain to 11,890.

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Another shot of market-friendly news came from the Federal Reserve, which kept target rates unchanged at what is essentially 0%. Strong gains by Microsoft and Apple also helped lift the blue-chip Dow Jones Industrial Average, which added 2.0% to close at 28,390, while the broader S&P 500 rose 2.0% to 3,510.

Other action in the stock market today:

  • The Russell 2000 rose 2.8% to 1,660.
  • U.S. crude oil futures fell 1.7% to $38.50 per barrel.
  • Gold futures gained 2.8% to $1,948.60 per ounce.

Don't Let the Rally Fool You

It may have felt like a "risk-on" kind of trading day, but investors would do well to avoid succumbing to irrational exuberance and stick to their long-term plans.

A divided government is not a guarantee of strong market performance going forward, and rising cases of COVID-19 could make for a painful winter. Although there's reason to expect certain stocks and sectors to do better under a Biden presidency (opens in new tab), they could just as well struggle if Senate resistance prohibits progress on favorable Biden policies.

The same caution is warranted with 2021's hottest initial public offerings (opens in new tab). IPOs are generally too risky for most retail investors to bother with in the first place, and the potential for protracted struggles in D.C. over everything from taxes to environmental policy makes them even more so.

The steady play for long-term investors: High-quality dividend growth stocks (opens in new tab). They require patience, but, given time, their rising yields can more than make up for lighter payouts in the present.

Dan Burrows
Senior Investing Writer,

Dan Burrows is a financial writer at Kiplinger, having joined the august publication full time in 2016.

A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. He has written for The Wall Street Journal, Bloomberg, Consumer Reports, Senior Executive and Boston magazine, and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among other publications. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities.

Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.

In his current role at Kiplinger, Dan writes about equities, fixed income, currencies, commodities, funds, macroeconomics and more.

Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.

Disclosure: Dan does not trade stocks or other securities. Rather, he dollar-cost averages into cheap funds and index funds and holds them forever in tax-advantaged accounts.