With the Dow surging 6.5% for the week, Wall Street appears to be bullish on Washington gridlock, banking on a Biden presidency mitigated by a Republican Senate.
Dan Eye of Fort Pitt Capital Group said the market “is just getting more comfortable with the outcome of a divided government, where we see a continuation of political gridlock [and] no meaningful changes on tax policy.”
Markets, he said, like “no changes” because corporations then can plan while uncertainty gives Wall Street the jitters.
Alicia Levine of BNY Mellon Investment said the market is “now pricing in a Biden presidency with a Republican Senate, and the rotation that we saw was based on that.”
She warned that if the Senate does not end up with a GOP majority, there will be higher risks.
At the moment, with four Senate races undecided, the Republican and Democratic caucuses each have 48 seats.
However, in Alaska incumbent Republican Sen. Dan Sullivan has a 2-1 lead over his challenger. In Georgia, incumbent GOP Sen. David Perdue has a 100,000-vote lead, and in North Carolina, incumbent GOP Sen. Thom Tillis has a 100,000 vote lead.
Republicans took back an Alabama seat, with incumbent Democratic Sen. Doug Jones losing to former Auburn University football coach Tommy Tuberville.
The Republican incumbents who maintained their seats were Susan Collins of Maine, Steve Daines in Montana, Ben Sasse of Nebraska, Joni Ernst of Iowa, Bill Cassidy in Louisiana, Cynthia Hyde-Smith of Mississippi, Jim Risch in Idaho, Roger Marshall in Kansas, Mitch McConnell in Kentucky, Jim Inhofe in Oklahoma, Tom Cotton in Arkansas, Mike Rounds of South Dakota, Cynthia Lummis of Wyoming, Shelley Moore Capito of West Virginia, John Cornyn of Texas and Lindsey Graham of South Carolina.
Republican Bill Hagerty in Tennessee won an open seat.
Former Democratic Colorado Gov. John Hickenlooper took Republican Sen. Cory Gardner’s seat.
Democratic incumbents Tina Smith of Minnesota, Chris Coons in Delaware, Richard Durbin in Illinois, Edward Markey in Massachusetts, Jeanne Shaheen in New Hampshire, Cory Booker in New Jersey, Jeff Merkley of Oregon, John Reed in Rhode Island and Mark Warner in Virginia were victorious.
And in Arizona, Democrat Mark Kelly defeated incumbent Republican Sen. Martha McSally.
Democrat Ben Ray Lujan won the open seat in New Mexico.
Prior to Election Day, Republicans held 53 seats and Democrats 45, with two independents caucusing with the Democrats.
Republicans were defending 23 seats while the Democrats defended 12.
In the 2014 election, the last time these seats were up for election, Republicans won nine seats from Democrats and took over the majority in the Senate. They maintained their hold in 2016 and 2018.
