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Post-Election Rally Welcomes Capitol Gridlock

Mark Vickery
·3 min read

The first trading day after Election Day 2020 was a success, with market indexes coming in strongly higher, albeit off session highs: the Dow rose 367 points or 1.3%, the S&P 500 +74 points or +2.2% and the Nasdaq taking home the lion’s share, +430.2 points or +3.85%. The Russell 2000 barely registered in positive territory, +0.05%. With the presidency still in doubt — and possible litigation to follow — as well as a Senate remaining in the GOP’s hands, this can only mean one thing for Congress going forward: gridlock.

“You can’t be serious,” you say? How could contested results and the two bodies of the Legislature checking each other be a good thing? Just take another gander at the nearly 4% gain on the Nasdaq — don’t plan on a government bust-up of FAANG stocks any time in the future. Facebook FB rose 8% today alone. Also, no fast-track government healthcare appears in anyone’s crystal ball at this stage — UnitedHealthcare UNH was up 10% today.

Healthcare rose 4.5% and Communications +4.25%, while Materials fell 1.7% and Utilities -1.6%. Perhaps the major stock with the biggest gains today were Uber UBER and Lyft LYFT, up 14% and 11%, respectively, which did not gain from the General Election results (or lack thereof), but the passage of Prop 22 in California. This measure approaches a sweet-spot of sorts for the ride-share companies and their drivers; they won’t be considered full-time employees of the companies, allowing themselves a modicum of independence, but they also won’t be completely independent, without access to healthcare insurance and the like.

Qualcomm QCOM put up a big beat in its fiscal Q4, rising 5% in the post-market as a result: earnings of $1.45 per share was a big step beyond the $1.19 in the Zacks consensus, double the year-ago’s 78 cents per share. This was on $6.5 billion in sales, which sped past the $5.93 billion expected. Its quarterly guidance for fiscal Q1 pushed the EPS to $2.05 per share from the $1.64 in the Zacks consensus, on $7.8-8.6 billion in revenues, well ahead of the $7.16 billion anticipated. The company has posted no earnings misses for at least the past three years.

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