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Data: FactSet; Chart: Axios Visuals

U.S. stocks which analysts and strategists insisted had been rising based on the anticipation of a blue wave Democratic victory in the House, Senate and White House — had their best day in nearly seven months as that possibility looked to be wiped off the table.

  • While some races have not yet been called, Democrat Joe Biden looks poised to win in his election against President Trump, but so do many incumbent Republicans senators.

What they're saying: Some attributed the stock market's surge — the Nasdaq rose 3.9% and the S&P 500 gained 2.2% — to the market's happiness with a potential divided government and discounted prospects of tax increases. However, there were other explanations...

1. The tech sector "was uniquely exposed to higher yields, higher taxes,” Alicia Levine, chief strategist at BNY Mellon Investment Management, told Bloomberg.

  • “That created a viscous reversion trade into cyclicals with the expectation yields were moving up with the prospect of further stimulus.”

2. "Financial markets are virtually back to the future, with monetary policy driving asset prices ever higher funded by unlimited zero-per-cent central bank money globally, and by the Federal Reserve in particular," Jeffrey Halley, a senior market analyst at Oanda, told Reuters.

  • "The election was a victory for higher equity prices, higher commodity prices, higher house prices, a rally in emerging markets and a much lower U.S. dollar."

3. Stock investors may be in something of a “post-election fog” or a “drunken euphoria” about an apparent quick conclusion to the presidential race but may also be repricing expectations for economic growth, says Tom Essaye, director of Sevens Report Research.

  • "The knee-jerk reaction in markets is essentially this rush back into growth and tech stocks ... because without this massive stimulus it’s reasonable that the economy could be growth challenged at this point."
  • Those reduced expectations also caused yields on the benchmark 10-year Treasury yield to fall 16 basis points from their late Tuesday levels.

Yes, but: Senate Majority Leader Mitch McConnell said Congress should approve a new coronavirus relief bill by the end of the year, and flagged the possibility that a bill would include additional support for state and local governments, a longstanding Democratic priority.

  • Investors expect that bill will be around $1 trillion, rather than the $3 trillion package expected if Democrats had taken control of the Senate.

Of note: ADP's private payrolls report fell well short of estimates and the Institute for Supply Management's gauge of the U.S. services sector expanded at the slowest pace in five months.

Go deeper

Stock market has worst week since October amid Reddit frenzy

Photo: Tiffany Hagler-Geard/Bloomberg via Getty Images

Wall Street had its worst week since October as day traders bid up stocks for GameStop, AMC and others that gained popularity on Reddit.

Details: The S&P 500 fell more than 1.9% on Friday. All of the major averages fell more than 3% this week.

Virginia lawmakers vote to legalize marijuana in 2024

Virginia Gov. Ralph Northam. Photo: Alex Edelman/Getty Images

Lawmakers in Virginia on Saturday approved compromise legislation that would legalize marijuana in 2024, putting the state a step closer to becoming the first in the South to end prohibition on the drug, the Richmond Times-Dispatch reports.

Why it matters: The legislation will make Virginia the 16th state to legalize marijuana, per Politico. It would add to a slate of laws that have seen Virginia move in a more progressive direction during the tenure of Gov. Ralph Northam.

Scammers seize on COVID confusion

Data: FTC; Chart: Sara Wise/Axios

Scamming has skyrocketed in the past year, and much of the increase is attributed to COVID-related scams, more recently around vaccines.

Why it matters: The pandemic has created a prime opportunity for scammers to target people who are already confused about the chaotic rollouts of things like stimulus payments, loans, contact tracing and vaccines. Data shows that older people who aren't digitally literate are the most vulnerable.