Tech Stocks Surge With Apple Leading Gains, But Wall Street Cautious in Election Deadlock

Apple, Uber and Lyft are leading the Nasdaq notably higher Wednesday, but a post election deadlock, and the prospect of a contested outcome, has Wall Street in a cautious mood.
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The Election Market Minute

  • Global stocks mixed, with significant volatility in fixed income and currency markets, as the U.S. Presidential election remains too-close-to-call amid late counting in key states.
  • Former Vice President Joe Biden holds a slim 238 to 213 Electoral College lead over incumbent Donald Trump, although he trails in early vote counts in Pennsylvania and Michigan.
  • President Trump falsely declares victory, and threatens legal action based on a unproven allegation that voting is taking place after polls close.
  • U.S. COVID hospitalizations rise past 50,000, the highest in three months, as a deadly third wave continues to accelerate.
  • Wall Street futures suggest a mixed open amid ongoing vote counts across the country, but tech stock futures surge as Apple, Uber and Tesla lead pre-market gainers.

U.S. equity futures edged higher Wednesday, amid wild swings in financial markets around the world, as investors braced for a legally-contested election result, one of the least-favored outcomes of an exceedingly tight Presidential race that remains up-for-grabs with millions of votes left to be counted.

An early-morning shift in vote counts from Michigan and Wisconsin, however, have added to market hopes of a clean outcome, even as a likely Republican hold on the Senate put a cap on pre-market gains.

President Donald Trump falsely declared victory in a statement to reporters at the White House in the early hours of Wednesday morning as he held leads in the key swing states of Michigan and Pennsylvania.

"We were getting ready to win this election. Frankly, we did win this election," Trump said. "This is a major fraud on our nation. We want the law to be used in a proper manner. So we'll be going to the U.S. Supreme Court. We want all voting to stop."

Former Vice President Joe Biden, meanwhile, told supporters in Scranton that a probable victory in Arizona, which Trump won handily in 2016, a narrow lead in Wisconsin and still-to-be counted votes in the Rust Belt, meant the Democrats were "on track to win this election."

Nasdaq futures suggest a 370 point opening bell gain for the tech-focused benchmark, as investors bet on growth and pandemic stocks in advance of a possible re-election for the President, as well as Republican control of the Senate.

Early vote counts in most states suggest Democrats will retain control of the House of Representatives, putting the chances of a near-term stimulus deal on ice.

Shares of both Uber  (UBER) - Get Report and its ride-sharing rival Lyft  (LYFT) - Get Report were leading the early gains, as indications from a ballot initiative in California suggest the two companies can continue to treat their drivers as independent contractors.

Apple Inc.  (AAPL) - Get Report, was also on the rise and the most active stock in pre-market trading, gaining 3.4% to indicate an opening bell price of $114.16 each. Twitter Inc.  (TWTR) - Get Report shares were also on the move, rising 3.2% $43.06 each.

With Biden holding a projected Electoral College lead of 224 to 213, but counting ongoing in several states that could tip the balance and push either candidate above the 270 mark that would seal the White House, futures contracts tied to the Dow Jones Industrial Average suggest a 200 point opening bell gain, while those linked to the S&P 500 are priced for a 55 point gain.

With Biden holding a projected Electoral College lead of 238 to 213, but counting ongoing in several states that could tip the balance and push either candidate above the 270 mark that would seal the White House, futures contracts tied to the Dow Jones Industrial Average suggest a 50 point opening bell decline, while those linked to the S&P 500 are priced for a 12 point gain.

Curiously, despite the notable swings witnessed in financial markets overnight -- including a 14 basis point move in benchmark 10-year Treasury note yields -- equity market volatility has remained muted, with the VIX index falling 6.8% in extended hours trading to 34.55 points.

“With the global Covid-19 situation weighing down on market sentiment we should expect more volatility until at least we have better sense of the result of this election," said Stuart Clark, a portfolio manager at Quilter Investors in London.

“What markets will be disappointed with should this end up being a dragged-out affair is the lack of a swift stimulus package that would inevitably buoy share prices," he added. "We are going to have to wait to see what all this means for the economic recovery, but in the short-term it is not the scenario investors wanted."

The U.S. dollar index, which tracks the greenback against a basket of six global currency peers, was marked 0.12% higher at 93.662, but flight-to-safety trades were not immediately evident in overnight markets, with spot gold prices down around 0.8% on the session at $1,892.46 per ounce.

European stocks were modestly weaker in the opening hours of trading in Frankfurt, but jumped higher as vote tallies showed Biden building a narrow lead in Wisconsin, with the Stoxx 600 rising 0.5% and Germany's trade-sensitive DAX performance index rising 067%. Britain's FTSE 100 was marked 0.4% higher in London.