Stocks Zoomed Higher Monday As Market Bets On Biden And Stimulus; Media & ‘Value Stocks’ Up, Tech Out

Stock Market

Stocks jumped Monday as Democratic candidate Joe Biden leads in the polls and investors predicted a wave of stimulus will buck up the economy if he’s elected, and especially if the Dems take the Senate. Upbeat sentiment buoyed media from broadcasters to Discovery, AMC Networks, ViacomCBS and Netflix — but left tech out in the cold.

The DJIA rose more than 400 points, or 1.6%, and the S&P 500 ended up 1.2%. The tech-heavy Nasdaq was down but firmed slightly at the close with U.S. Election Day on Tuesday. Stocks from oil to construction to banks and industrials led the surge, which followed an awful last week of October, where the markets registered their worst showing since March.

Growth stocks like tech (versus so-called “value stocks”) lost ground, with Amazon, Spotify, Twitter, Facebook and Apple in the red. Twitter was one of the market’s worst performers, ending off nearly 5%. These behemoths have had a stellar run this year and, by some accounts, are overvalued.

In the stimulus versus stay-at-home battle, Zoom, Slack and DocuSign were down. That’s despite the fact that COVID cases are spiking in the U.S. and shutdowns spreading across Europe.

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Investors predict that a blue wave would lift the chances of a comprehensive stimulus deal getting passed in the winter. A tightening race in battleground states, however, could determine the outcome in the electoral college. A contested election would the worst scenario for markets, which hate uncertainty.

“We have been emphasizing that the Senate outcome is important for the trajectory of fiscal policy,” Citi economist Andrew Hollenhorst said in a note to clients cited by CNN, even though neither party is likely to get a filibuster-proof majority so bipartisan cooperation could still be needed for the next stimulus bill.

“Under any election scenario we expect a $1.5 trillion plus fiscal package, possibly as early as just post-election,” Hollenhorst said.

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Congress has been negotiating a second stimulus deal since the summer with no result.

Investors seem to be shrugging off a tax factor: Biden has said he’ll partly reverse Trump’s corporate tax cuts — raising the corporate rate from 21% to 28%. Stimulus is seen as the key factor in moving the economy.

AMC Networks, which beat expectations in an earnings report this morning, jumped 6.5%.

Discovery was up, as were Lionsgate, AT&T and ViacomCBS. Netflix gained 1.45%.

The rebound did not help Disney, down about 1%, or Comcast, off about 2%.

Financially strapped AMC Entertainment was having a bad day ahead of its third quarter earnings this afternoon following news this morning that it plans to sell 20 million shares to raise cash. The stock was down nearly 9% ahead of the close.

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