Wall Street Close: Investors banking on GOP Senate

Investors on Thursday piled in again, banking on the Republicans retaining control of the Senate which would consequently block any major policy changes that could hurt corporate profits from under a new under Joe Biden leadership.

Biden is almost across the line of victory following his winning of Michigan and Wisconsin.

Investors have taken the view that despite the remaining battleground states are still on a knife's edge, Joe Biden has won this election and a stimulus package is on its way regardless of a divided Congress. 

With a GOP Senate, there are less concerns about tighter regulations on Big Tech and a corporate tax hike.

However, due to a divided Congress, any stimulus package that is agreed upon is likely to be much smaller than anticipated, so the Federal Reserve will be crucial for markets in the New Year. 

''Equity markets are incredibly strong despite uncertainty on the US presidential race and control of the Senate. A runoff election for the Senate may be required in Georgia, which would mean a clear result wouldn’t be known until January,'' analysts at ANZ Bank explained.

''For now, the market is assuming a mixed Congress and a tighter fiscal stance. Hence, more generous Fed liquidity would be required to achieve its average inflation target.''

On Thursday, the Fed's interest rate decision and event was lacking anything new for markets to chew on, but Chair Powell said that the Fed would not consider directly funding fiscal activities but again pledged to do whatever it can sustain the economy.

As for the three main benchmark's performances, the Dow Jones Industrial Average rose 542.52 points, or 1.95%, to 28,390.18. The S&P 500 added 67.01 points, or 1.95%, to 3,510.45 and the Nasdaq Composite added 300.15 points, or 2.59%, to 11,890.93.