The stock market won’t tell us the winner, but it could indicate what is next for the U.S. economy.
Wall Street famously loves certainty, which was decidedly absent on Wednesday as investors waited for key states to tally the votes that could prove decisive in Tuesday’s presidential election. “It’s interesting that the market is up even though the uncertainty about who will be president has not really been resolved, in particular in light of possible legal battles,” said Alexander Wagner of the University of Zurich and the Swiss Finance Institute, as well as the co-author of a study on the stock market’s reaction to Donald Trump’s 2016 presidential win. “But markets react to news. And it’s not news that there will be lawsuits, or at least attempts at lawsuits.” Even as millions of votes were still being counted Wednesday, the Dow Jones industrial, or 1.3%, the S&P 500-stock index added 2.2%, and the technology-heavy Nasdaq rose roughly 4%. Here’s how Wall Street is reading the election results so far. The $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act this spring bolstered both the stock market and the broader economy. Stocks have regained all of their early pandemic-related losses since the stimulus bill passed in late March. The negotiations around a possible second round of stimulus appeared to be what has been driving up stocks until recent weeks. Indeed, many were saying the reason the stock market was rising in the fall along with Joe Biden’s poll numbers was that they expected a win for the former vice president would raise the odds of more stimulus spending.
