Tech stocks shot higher as American voters went to the polls, the gains coming far ahead of results that could indicate who will win the presidency.
American stocks broadly rose, with the S&P 500 index closing up 1.78% to 3,369.11 — one of the best Election Day closes for the S&P — while the tech-heavy Nasdaq Composite closed up 1.85% to 11,160.57. Every sector except one closed higher today. The sole exception was energy, which was down about 0.75% today. Saas and cloud-computing stocks followed along with the rest of American stocks, closing up 2.28%.
That bump might seem negligible, but consider the past month. The Nasdaq was down just over 8% from all-time highs at the start of trading today. That makes today’s gains worth around a fourth of the gap from its recent declines back to record levels. The Nasdaq fell more than 10% from its recent peak before starting to recover in late-October, making today’s rally part of a developing upward trend.
Depending on how one reads the polling tea leaves, the gains could be read as an endorsement of either candidate’s platform.
Today’s stock market moves come on the back of an uneven technology earnings cycle, with major tech companies swallowing lumps, while some smaller industry players like Five9 rode COVID-19 tailwinds to strong results. Netflix, Intel, Apple and others struggled to impress investors. Indeed, the domestic stock market’s reaction to earnings beats has been muted this cycle, in contrast to other areas; it appears that American equities were priced to surpass expectations.
For tech, today’s rebound is welcome, possibly helping pave the way for a rash of IPO filings that are expected before the year’s end. Airbnb, DoorDash and others are still candidates for flotation this year.
Certain share prices, notably those of Uber and Lyft, were already on the rise Monday on investor confidence that California voters will pass Proposition 22. The ballot measure, if approved, will exempt the ridesharing companies from a new California law that forces gig economy workers to be classified as employees rather than contractors.
Pulling back for a moment, Uber’s share price is still down about 3.87% from one month ago. But it’s been recovering, with a pop in the past two days. Uber’s share price closed 2% higher Monday. Uber shares rose 2.76% to close at $35.77 today. Lyft has experienced an even larger bump over the past few days. Lyft shares closed up 7.06% to $26.23 today.
The stakes are high for Uber and Lyft this Election Day. If Proposition 22 fails, the companies say they will have to change their business models. Both companies have threatened temporary shutdowns in the state if forced to comply with the new California law. For now it seems, investors believe Uber and Lyft will be able to continue to operate as they always have.