The S&P 500 closed flat however had its finest week since April, though the selection has not but been made
Stocks closed mostly flat on Friday as traders sought clarity on the results of the presidential and congressional elections.
The S&P 500 ended the session about 1 point at 3,509.44. The Nasdaq Composite rose less than 0.1% to 11,895.23. The Dow Jones Industrial fell 66.78 points, or 0.2%, to end the day at 28,323.40.
Energy and finance were the worst performing sectors in the S&P 500, falling 2.1% and 0.8% respectively. UnitedHealth led the Dow down nearly 2%.
Democratic candidate Joe Biden leads with 253 votes, according to NBC News forecasts, while President Donald Trump has 214 votes. Votes are still counted in several key states, including Nevada, Arizona, Pennsylvania, and Georgia. According to NBC News, Biden has a slight head start in Georgia and Pennsylvania.
Despite the uncertainty over the presidential election, Wall Street had its best weekly performance since April. The S&P 500 and Nasdaq rose 7.3% and 9%, respectively, over the week. The Dow rose 6.9% this week. The S&P 500 also saw its biggest election week win since 1932.
Republican victories in several key Senate races that lower the chance of a "blue wave" and the potential for higher taxes and stricter regulations were cited by Wall Street strategists as the cause of the stock rally. However, according to NBC News forecasts, with two possible runoff elections in Georgia, the Republicans have not yet won the seats necessary to control the Senate.
"The market is increasingly comfortable with the outcome of a divided government where we see a continuation of the political deadlock [and] no significant changes in tax policy," said Dan Eye, head of asset allocation and equity research at Fort Pitt Capital Group.
Of course, a divided government could make it difficult for lawmakers to impose new fiscal stimuli. The Washington Post also reported, citing sources, that the White House would not be allowed to propose a new aid package. Instead, Senate Majority Leader Mitch McConnell is supposed to push through a "thin" bailout package that the report said was dead upon arrival at the House Democrats.
Alicia Levine, chief strategist at BNY Mellon Investment Management, said the possibility that Democrats gain tight control over the Senate is one of the biggest risks that would not be priced into the market, even if the outflows didn't necessarily lead to a decline in the market Markets.
"The market is now factoring in a Biden presidency with a Republican Senate, and the rotation we saw was based on that," Levine said. "And if the risk increases that this is not the case for the Senate, this entire move could also pose some risk."
Levine also said the strength of tech stocks earlier this week was due in part to their strong earnings performance and resilience in the event of new economic restraints in the United States during the winter to slow the spread of the coronavirus.
Republicans have filed a number of legal challenges in several states related to the running vote, and the Trump campaign said it would request a recount in Wisconsin.
In a White House announcement on Thursday evening, Trump falsely claimed victory in multiple states and alleged election fraud without evidence. "There has been a tremendous amount of litigation in general because the process was unfair."
The Biden campaign has now demanded that all votes be counted.
"Democracy is sometimes chaotic. Sometimes it also takes a little patience," said the former vice president in a brief speech in Delaware on Thursday, adding that he was confident that his ticket would be declared the winner once all the votes were counted.
Sentiment on Friday was bolstered by better than expected US unemployment data.
Report on strong jobs
"The latest job report shows that the US economy is rapidly recovering from COVID-related standstills in the spring and unemployment has already fallen below 7%," said Tony Bedikian, head of global markets at Citizens.
"Despite strong signals that many Americans are back to work, the number of coronavirus cases is rising and this could mean new restrictions on daily living that could further accelerate the transition to a more digital economy and increase calls for additional government incentives . " "Bedikian added.