By Eurasia Business News – November 4, 2020
While the outcome of the US presidential election is still pending, the health and technology sectors flew to Wall Street on Wednesday, in the absence of a “blue wave”, which would have seen the Democrats win both the White House and both Houses of Congress.
The broad S&P 500 index jumped 2.2% to 3443.44 points in the session, supported by the health sector index (+ 4.5%), closely followed by communication services (+ 4.1%) and technology (+ 3.9%), also relieved by the prospect of a divided US Congress, which notably reduces the risks of severe antitrust laws against the “GAFA”.
As the ballots counting is still underway in battleground states, the partial election results showed Wednesday night that Joe Biden and Donald Trump are neck and neck in the last swing States. In Congress, Democrats are expected to retain their majority in the House of Representatives, while Republicans are expected to keep their narrow lead in the Senate (a third of which was renewed on Tuesday). Such outcomes would hamper any ability by Democrats to push a progressive agenda, including increasing taxes, changing health care and how tech companies are regulated.
On Wall Street, health insurer UnitedHealth Group soars in session by 10.5%, while on the side of laboratories, Merck & Co takes 5%, Pfizer advances 3%, AstraZeneca takes 6.5%, and biotech Amgen climbs 4.4%. The race for a vaccine against COVID-19 is a strong stimulus to value of health industry stocks.
In addition Telehealth giant Teladoc saw its stock price rise more than 3.6% to reach $202 per share. Teladoc just recently acquired digital health company Livongo in a blockbuster $18.5 billion deal.
Medical device company ResMed reported a 3.6% price hike to $209.75.
Among the big techs, Apple climbs 4.4%, Microsoft takes 5.4% and Salesforce takes 6%, while Facebook (+ 7.9%), Alphabet (+ 5.9%) and Amazon (+5, 8%) also jump.
A divided Congress reduces risk for health and tech giants
According to analysts, a divided power in Washington avoids the risk of the adoption of a federal regulatory reform limiting the price of drugs or federal antitrust procedure against GAFA giants (Google ; Amazon ; Facebook ; Apple).
If the US Senate remains narrowly on the Republican side after the vote, no president, Biden or Trump, will be able to pass a major reform, which would require a majority of 60% of the Senate, analysts believe.
A Senate that remained Republican would also be likely to block or reduce the scope of Joe Biden’s plans, if elected, to raise corporate taxes and to tax more capital gains and capital income. This prospect of a Republican Senate favourable to business fuels the optimism of investors.
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