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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

Nov 15, 2020 - Politics & Policy

The economic advisers vying for gigs in Joe Biden's White House

Illustration: Eniola Odetunde/Axios

Joe Biden plans to fill his White House with economic advisers more progressive than he is, but they may be blocked from their most aggressive fiscal moves if Republicans maintain control of the Senate.

Why it matters: If the GOP keeps these progressives from winning a massive stimulus, they may be graded on a different curve: simply persuading Congress to spend more money, and relying on regulatory changes to advance Biden's broader agenda.

Dan Primack, author of Pro Rata
2 hours ago - Economy & Business

New deals in the COVID economy

Illustration: Sarah Grillo/Axios

COVID-19 is the macro horror of our lifetimes, and has destroyed or severely damaged countless businesses. But, like with most horribles, it also has created some opportunities.

Driving the news: Merck this morning announced an agreement to buy OncoImmune, a Maryland-based biotech that showed promising late-stage clinical results for a therapy that treats severe and critical coronavirus cases.

2 hours ago - Technology

Biden's openings for tech progress

Photo illustration: Eniola Odetunde/Axios. Photo: Win McNamee/Getty Images 

Item No. 1 on President-elect Joe Biden's day-one tech agenda, controlling the flood of misinformation online, offers no fast fixes — but other tech issues facing the new administration hold out opportunities for quick action and concrete progress.

What to watch: Closing the digital divide will be a high priority, as the pandemic has exposed how many Americans still lack reliable in-home internet connections and the devices needed to work and learn remotely.