Wall Street Confronts an Uncertain Election Outcome: Live Business Updates

The outcome that many on Wall Street feared but expected emerged on Wednesday, as Election Day failed to produce a clear victor in the U.S. presidential race, leaving investors to wait and watch.

Stock futures swung dramatically between gains and losses throughout the night and into early Wednesday. Trading in futures contracts for the SP 500 moved between gains and losses nearly 10 times in the 12 hours leading to 6 a.m. Eastern on Wednesday.

The most dramatic market moves came around 2 a.m. Eastern after President Trump said that he had won re-election against Joseph R. Biden Jr. despite the fact that several battleground states had not announced results, and that he would ask the Supreme Court to intervene in the race.

The futures, which tumbled after Mr. Trump’s remarks, recovered some ground to point to a gain of less than half a percent in the SP 500 when trading begin, while the Dow Jones industrial average was poised for a slight fall.

European markets opened about 1 percent lower and then regained some of their losses as traders set in for what could be a long wait for results.

Susannah Streeter, an analyst at Hargreaves Lansdown said investors were adopting a wait-and-see approach but that Trump’s comments were a reminder that it could be a volatile trading session. Earlier, Asian markets finished mixed after a turbulent ride.

One of the biggest swings was in yields for U.S. Treasury bonds, an indicator of investor nervousness. Yields fell as prices rose, indicating a greater desire to park money in a safe place.

Investors saw a clearer path on Tuesday, when they priced in a relatively quick victory for Mr. Biden, the Democratic candidate. A strong victory for him and his party could set the stage for a large pandemic relief spending package in Washington early next year. That could bolster the economy, fueling consumer spending and cushioning growth even as coronavirus cases surge again. It would also mean big deficits in the near term, potentially pushing longer-term interest rates higher.

Wall Street has been clamoring for such a program for months, but negotiations between the White House and the Democratic leadership in the House of Representatives fizzled out in recent weeks.

Financial markets were whipsawed overnight as traders and pundits saw early returns pointing to a close result, raising the possibility that President Trump could be re-elected, and the Senate remain in Republican control. On one hand, Mr. Trump’s low taxes and limited regulation have been popular among investors. On the other, analysts have been clear that a divided government could hurt the chances for a big spending package. Investors might also be wary that delayed vote counts could lead to a long period of uncertainty.

“You’re not seeing as large a blue wave as had been predicted early on,” said Gregory Daco, chief U.S. economist at Oxford Economics, around 11 p.m. New York time.

In Japan, the Nikkei rose 1.7 percent, but other markets in the region were less ebullient after a turbulent trading day.

The 10-year Treasury yield dropped 10 basis points, or 0.1 percentage points, to 0.79 percent. It is the steepest one-day fall in yields since late March.

Among unscientific indicators, two Chinese stocks went on rides along with the polls based on their names. A company called Wisesoft, whose name in Chinese sounds like “Uncle Trump wisely wins,” jumped more than 7 percent at one point on the stock exchange in the city of Shenzhen.

Another Shenzhen stock, Zhejiang Giuseppe Garment, fell more than 1 percent earlier in the day. Its name in Chinese sounds a little like “Joe Biden” if spoken over a scratchy phone line.

Article source: https://www.nytimes.com/live/2020/11/04/business/us-economy-coronavirus