S&P 500 surges higher in the best week since April as Biden nears victory

S&P 500 price has surged a further 2.5% today to total weekly gains to about 8% as Joe Biden appears to be one step away from the White House. 

Fundamental analysis: Biden on the brink of White House

Joe Biden is one step closer to winning the White House in the ongoing presidential race as election officials counted votes in several key states. Just two days after the polls closed, President Donald Trump cited election fraud without offering any evidence to support the allegations and took legal action as well as demanded recounts in the race.

The battle was boiling down to a very tight race across five U.S. states. Democrat candidate Joe Biden was slightly ahead in Nevada and Arizona while President Trump has been losing his lead in critical states of Pennsylvania and Georgia following the inclusion of mail-in and absentee votes. Trump is also leading in the key state of North Carolina. 

Market research and exit polling firm Edison Research gave Biden a lead of 243 electoral college votes, compared to Trump’s 213. Other data providers said Biden had triumphed in Wisconsin, which if true would provide him with additional 10 votes. A candidate must win a total of 270 votes to become the president.

As the race became tighter and the chances of a stalemate in Congress increased, investors became more optimistic that some major legislation would be challenging to pass, sending the U.S. stock market futures slightly higher on Wednesday night.

S&P emini futures ticked 0.1% higher, extending its rally from yesterday’s trading session, while Nasdaq 100 emini futures climbed  0.5%.

“Even if Joe Biden wins the Presidency, it looks like we are going to have a divided congress so the opportunity to have meaningful change at the fiscal level is pretty slim, and that is what is being priced into the back end of the market today,” said David Joy, head strategist at Ameriprise Financial.

Technical analysis: Equities scream higher

S&P 500 is up nearly 2.5% higher to print $3529 and therefore erase losses from the past three weeks. A Biden win is likely to yield a massive relief package that is supportive of equities. 

S&P 500 daily chart (TradingView)

In case the buyers are able to break a series of the lower highs, a move above $3600 would pave the way for a trip towards the next major resistance at $3725. 

Summary

Joe Biden is one step closer to winning the U.S. presidential election after votes in several key states have been counted. U.S. stock market futures slightly climbed today as circumstances surrounding the ongoing election indicate less regulatory risk.

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