Stock jumped Monday as Democratic candidate Joseph 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 tomorrow. 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, 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.
Twitter, Tech Stocks Drag Market Down As Shares Close Out Worst Week Since March
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.
Investors predict 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.
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, so was 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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