The counting continues, but Wall Street is liking what it sees from the election.
Even with losses on Friday morning, the futures contract on the S&P 500 ES00, -0.02% is up about 4% since polls closed Tuesday night on the West Coast, with even stronger gains for the tech-heavy Nasdaq 100 NQ00, -0.20%. Deutsche Bank’s Asia strategists said in a note to clients that “it’s time to move on,” though they said the uncertainty from it could still last several days.
Jim Smigiel, chief investment officer of nontraditional strategies at SEI Investments, says the market is pricing in divided government. “What we’re seeing in the market is a recognition that with that divided government and with no massive mandate that would have come with a blue wave, I think the importance really switches back to the monetary side of things,” said Smigiel, who leads SEI’s asset-allocation program. The Federal Reserve on Thursday kept interest rates unchanged, and Chair Jerome Powell said the central bank was “not out of power” to do more.
“Monetary stimulus is going to do a decent job of keeping liquidity flowing in the market, and is going to benefit those kind of growth, high-flying stocks,” Smigiel added. “And you should probably see the reflation themes struggling a little bit.”
Smigiel says health-care investments may be attractive due to the election. “A large-scale effort to remake the health-care sector is probably off the table,” he said.
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