US stocks continue to ride the unwinding of ‘blue wave’ bets, sending big-tech and healthcare stocks sharply higher. The US presidential election race is getting closer to calling it for Biden, but a drawn-out election fight with recounts and legal disputes could mean final results won’t happen until early December. Regardless of who wins, it seems Congress will be divided, and Wall Street does not have to plan for corporate tax hikes, single-payer healthcare, sweeping clean energy initiatives, and massive infrastructure spending.
Biden continues to inch towards 270, Fox has him with 264 electoral votes, with a 49.3% to 48.7% lead (estimated 87.2% of vote count) for Nevada’s crucial 6 votes. The path for re-election for President Trump is difficult as he still needs to win the remaining (4) states and will need to win some legal fights and have the Wisconsin recount go his way.
The focus shifts back to the Fed and on how many clues they will give that they are closer to doing more. The Fed will reiterate the need for fiscal support, but given the divided Congress outcome, expectations will be for less aid. The need for more support is growing since the next couple of months could see a significant spread of the coronavirus and that will likely be met with further restrictive measures. No major changes are expected today, but they should help signal that the risks to financial conditions and slower economic activity will likely warrant further action at the December policy meeting.