If there’s a clear takeaway from last night’s election, it’s that the polls got it wrong — again.
“To me, the biggest takeaway is the massive, absolutely massive failure of polling,” says Fundstrat Global Advisors managing partner Tom Lee.
“This is a big money business and is used to influence behavior and financial markets. And these polls have been dead wrong again — an indictment of polling,” wrote Lee in a note to investors.
The prospects of a blue wave have fizzled as Democrats failed to pick up as many Senate seats as they’d hoped for. A divided Congress has driven pharmaceuticals, communications services and tech stocks higher as the Nasdaq (^IXIC) gained 4% during todays session and the Dow (^DJI) shot up up more than 600 points. Even energy stocks are higher on the prospects of less regulations and legislation out of D.C.
Lee also points out the recent sell-off in the markets leading up to election week.
“The Nasdaq got obliterated because of the fears of a capital gains tax increase. So that's kind of off the table with the Senate staying Republican,” said Lee
He highlights a balanced Congress may ultimately mean a higher probability of a stimulus bill.
“Under this scenario with Republicans controlling Senate, I think the chances of stimulus before year-end have actually gone up, because you're not having a lame duck session where all three chambers are changing,” Lee told Yahoo Finance Live.
“At the end of the day, the market doesn't need a massive stimulus bill. It actually needs to put a lifeline to those millions of Americans that are suffering,” he added.
As for the presidency, two sectors which Lee says are most closely tied to a Trump re-election are real estate and energy which “are posting tripped rallies.” That leads him to believe the markets may be indicating a Biden win is likely.
Ines covers the U.S. stock market. Follow her on Twitter at @ines_ferre
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