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* S&P healthcare index jumps to record high
* Banks among rare decliners in afternoon trading
* Growth stocks soundly outperform value names
(New throughout, updates prices, market activity and comments
to market close)
By Chuck Mikolajczak
NEW YORK, Nov 4 (Reuters) - U.S. stocks surged to close
higher on Wednesday as the presidential election race remained
cloudy but the likelihood of gridlock in Congress made investors
optimistic that major policy changes would be difficult to
enact.
Both President Donald Trump and Democratic nominee Joe Biden
still had paths to reach the 270 Electoral College votes needed
to win as states kept counting mail-in ballots. Biden held a
narrow lead in Wisconsin late Wednesday while Trump's campaign
said it had filed a lawsuit in Wisconsin in an attempt to halt
vote counting. A surprise win by Republican Senator Susan Collins in Maine
dimmed hopes by Democrats that they could get control of the
U.S. Senate.
Growth stocks .RLG , currently comprised of a large portion
of names in areas such as tech, surged as investors anticipated
a similar landscape to the one in the months leading up to the
election, in which they generally outperformed value stocks
.RLV , which are currently comprised of mostly cyclical stocks
such as banks and energy.
"Even if Joe Biden wins the Presidency, it looks like we are
going to have a divided congress so the opportunity to have
meaningful change at the fiscal level is pretty slim, and that
is what is being priced into the back end of the market today,"
said David Joy, chief market strategist at Ameriprise Financial
in Boston.
"If we are going to have a similar type of economic
environment as we've had, then we are going back to an emphasis
on trying to find earnings in a relatively scarce earnings
environment, back to the same winners as before."
Unofficially, the Dow Jones Industrial Average .DJI rose
371.42 points, or 1.35%, to 27,851.45, the S&P 500 .SPX gained
74.3 points, or 2.21%, to 3,443.46 and the Nasdaq Composite
.IXIC added 427.53 points, or 3.83%, to 11,588.10.
The S&P healthcare index .SPXHC jumped to a record high,
while the information technology sector .SPLRCT also gained
strongly, as a divided Congress means slimmer chances for
heightened antitrust scrutiny, capital gains taxes and a
restoration of parts of the Affordable Care Act. The healthcare
index was on track for its biggest daily percentage gain in
about five months.
Still, with the rising possibility of a contested
presidential election, investors have said they favor a
definitive, swift resolution that would clear the way for a deal
on a stimulus package to help revive the economy.
The NYSE FANG+TM Index .NYFANG , which includes the core
FAANG stocks such as Apple AAPL.O and Amazon .AMZNO jumped.
Shares of defense contractors Northrop Grumman NOC.N ,
Lockheed Martin LMT.N and Raytheon RTX.N all rose between on
receding chances of a cut in the defense budget.
Big Pharma Pfizer PFE.N , Merck & Co MRK.N and Johnson &
Johnson JNJ.N also climbed as the potentially split Congress
was likely to shield the industry from sweeping reform. The NYSE
Arca pharmaceutical index .DRG shot higher.
CBOE volatility index .VIX , a gauge for short-term
volatility, hit a two-week low after spiking to a four-month
high in the run-up to the election.
Despite the rally in stocks, the potential for political
uncertainty also sent investors to U.S. Treasuries, sparking the
biggest one-day drop in 10- and 30-year bond yields since June.
Shares of U.S. banks .SPXBK , which typically track Treasury
yields, slumped. US/
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S&P 500 in first terms: Trump vs Obama https://tmsnrt.rs/34Vuvjy
Markets under different presidents during history https://tmsnrt.rs/3p35jj4
Trump and the stock market https://tmsnrt.rs/31QeDN8
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