U.S. futures jump as potential Washington gridlock signals less regulatory risk

FILE PHOTO: The statue of former U.S. President George Washington is seen across from the New York Stock Exchange (NYSE) following Election Day in Manhattan, New York City, U.S., November 4, 2020. REUTERS/Andrew Kelly

(Reuters) – U.S. stock index futures jumped on Thursday as investors were optimistic that a potential gridlock in Washington could reduce the chance of major policy changes, although concerns remained about the risk of a contested presidential election.

At 3:06 a.m. ET, Dow e-minis were up 280 points, or 1.01%, S&P 500 e-minis were up 42.25 points, or 1.23%, and Nasdaq 100 e-minis were up 221.75 points, or 1.89%.

Democrat Joe Biden moved closer to victory in the U.S. presidential race on Thursday as election officials tallied votes in the handful of states that will determine the outcome and protesters took to the streets.

Meanwhile, Republicans appeared poised to retain control of the U.S. Senate on Wednesday after Senator Susan Collins defied political odds to win re-election in Maine.

“Assuming that things stay somewhat as they are – that Republicans will retain control of the Senate – this is best of both worlds,” said Philip Blancato, chief executive officer of Ladenburg Thalmann Asset Management in New York.

“The market will protect its capital gains and we are going to get a stimulus package either way. The worst possible outcome is a ‘blue sweep’ and a contested election.”

Wall Street’s main indexes had surged on Wednesday to close at their highest levels in more than a week, with the benchmark S&P 500 posting its best day since June and the tech-heavy Nasdaq since April.

Apple Inc, Amazon.com Inc and Alphabet Corp jumped more than 4%, while Facebook soared 8%, as investors bet Big Tech companies would face less antitrust risk under a divided Congress.

Shares of defense contractors Northrop Grumman and Lockheed Martin also rose on receding expectations of a cut in defense spending.

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