Dow futures rise 300 factors after Biden wins the presidency as rally continues after the elections
2020 U.S. Democratic presidential candidate Joe Biden points a finger at his election rally after the media announced Biden won the 2020 U.S. presidential election on November 7, 2020 in Wilmington, Delaware, United States.
Kevin Lemarque | Reuters
Stocks should continue their big post-election rally as futures rose in night trading on Sunday. The gains came when Democrat Joe Biden defeated incumbent Donald Trump in the US president's race for president-elect, according to NBC predictions.
The futures on the Dow Jones Industrial Average rose 319 points, which means an opening gain of around 300 points on Monday. The S&P 500 futures rose 1.1% and the Nasdaq 100 futures rose 1.4%.
The former vice president won after his planned win in Pennsylvania and Nevada on Saturday, according to NBC News predictions. The call came four days after election day and was accurately counted in several battlefield states.
Wall Street hoped the call would reduce the chances of a lengthy election campaign, even if Trump refused to admit. Many traders had placed bets on market volatility in November and closed these positions to fuel a rally.
Meanwhile, the chances of a "blue wave" drawing Democrats into a majority in the Senate and House of Representatives have waned, meaning drastic policy changes like tax hikes are less likely.
"With a Biden presidency with a Republican Senate, taxes are unlikely to rise. This was arguably investors' greatest fear of a Biden presidency," said Brian Levitt, global market strategist at Invesco, in a statement on Sunday. "And a Biden presidency could mean a return to a more traditional, predictable approach to trade policy that would likely result in less volatile markets."
Democrats are expected to keep their house majority despite Wall Street watching closely as Senate control is still pending. Both races in the Georgia Senate are expected to end in early January.
Wall Street had bounced back over the past week in anticipation of such a deadlocked government and should build on this rally as it gained clarity in the presidential race. All three major averages were just getting their best weekly performance since April. The S&P 500 and Nasdaq rose 7.3% and 9% respectively last week, while the Dow rose 6.9%. The S&P 500 also saw its biggest election week win since 1932.
Tech was the biggest winner among the 11 S&P 500 sectors last week, up 9.7%. Investors crowded the high-growth group as the prospect of higher taxes and stricter regulations waned amid a democratic crisis.
Trump rejects the result
Stock futures won despite Trump refusing to go to the polls, vowing his team will begin “following our case in court” starting Monday to ensure electoral laws are fully complied with.
The president and his alternates have filed lawsuits in several key states, including Pennsylvania and Michigan, signaling that they plan to push for recounts in some close races.
Biden is expected to announce on Monday the members of his coronavirus task force who will be tasked with developing a record-breaking plan to contain the coronavirus spread.
The US reported more than 126,000 new cases of the coronavirus two days in a row and, according to Johns Hopkins University, has seen a new record increase every day for the past four days.
"If the election focus wears off, investors will pay more attention to Covid as cases continue to explode and Europe takes a series of mitigation measures," Adam Crisafulli, founder of Vital Knowledge, said in a note on Sunday. "The anticipation of vaccines helped protect stocks from the ugly headlines of the virus."
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