US stocks rise sharply as election results keep trickling in

US stocks closed sharply higher on Wednesday, logging their third day of gains -- as well as the best day for the Nasdaq Composite since April, and the best S&P 500 performance since June.

Even though a delayed election result was heralded as the market’s “nightmare scenario”, the market rallied all day. Experts believe the market is receiving boost from a pricing-in of a potential delay, as well as hopes for a Democratic White House paired with a Republican Senate as that combination would lead to more modest policy.

The votes are still being counted in several key states. But it seems that investors are pricing in the possibility that Joe Biden will win the race for the White House and that Republicans will keep control of the Senate. Stocks are soaring today.

While that outcome is being viewed by some as the dream case — the proverbial gridlock in DC helping Wall Street — one strategist thinks the market is getting it all wrong.

"Biden and a GOP Senate is the worst-case scenario for the markets. It means a large fiscal stimulus deal is unlikely," said Eric Winograd, a senior economist at AB.

Winograd said that there will now be more pressure to get some sort of stimulus deal done in the lame duck session.

Otherwise, Biden and Republican lawmakers like Senate Majority Leader Mitch McConnell may only be able to agree on a so-called skinny deal that may not move the needle much.

"Biden and McConnell reaching across the aisle seems improbable at best," Winograd said, adding that he doubts the Federal Reserve can do much more than it already has to prop up the economy.

We don't yet know who the next President will be, but we do know what economists are expecting for tomorrow's jobless claims.

Thursday's report from the Labor Department is expected to show another 732,000 claims for first-time unemployment benefits. That would be some 20,000 fewer claims than in the week before, and not exactly a vast improvement. Nonetheless, any improvement is good news.

Continued jobless claims, which count workers who have applied for benefits for at least two weeks in a row, are expected to come in at 7.2 million, down from 7.8 million in the prior week. As with initial claims, it's great that fewer people need government benefits to make ends meet -- if that's indeed the reason the number is lower.

But jobless workers have increasingly been rolled onto alternative government benefit programs after exhausting state benefits. Last week's report showed that 3.7 million people were on the Pandemic Emergency Unemployment Compensation program, for example, which kicks in after regular benefits run out.

These numbers also don't yet include other Covid-era programs, such as Pandemic Unemployment Assistance, which was created to help workers like the self-employed who aren't usually eligible for jobless benefits.

Tech stocks are getting all the attention for their monstrous post-election rally -- but don't sleep on health care stocks. The Health Care Select SPDR ETF (XLV) is up more than 5% Wednesday, even better than the tech sector's 4% gain.

One factor of the spike is big surge for Biogen (BIIB), which soared nearly 40% following good news from the FDA about one of its Alzheimer's drugs.

But other Big Pharma firms, biotechs, insurers and other major health care firms were also up. Investors seem to be betting that the election outcome could diminish the chances of a "Bidencare" Affordable Care Act expansion getting approved by what could be a Joe Biden presidency and GOP-led Senate.

"The markets still believe Biden will win but what investors didn't want was a sweep," said Luis Strohmeier, a partner with Octavia Wealth Advisors.

James Ragan, director of wealth management research for D.A. Davidson, agreed: "Health care is doing well since it should benefit the most from a divided government. There would be less legislation."

While the election is of course top of mind, it's an exciting day for CNN Business as our digital live show, "Markets Now," is back home. The show returned to its old stomping grounds at the New York Stock Exchange for the first time since the coronavirus pandemic began.

Host Alison Kosik moderated today's show from NYSE for the first time in more than seven months. The last show at the exchange was filmed March 11.

"Markets Now" airs live every Wednesday at 12:45 pm ET.

So we got both no results and a massive stocks rally, even though it's exactly what investors referred to as the "nightmare scenario" before the election.

Why is this happening?

We're hitting a sweet spot for the stock market with the likelihood of electing a new president and keeping a conservative Senate, said Mike Novogratz, founder and CEO of Galaxy Digital Holdings on the CNN Business' digital live show Markets Now.

A divided government would mean the tax hikes expected under a Democratic sweep won't happen, but new stimulus money will likely still come through.

"I think it's a bullish sign for markets," Novogratz said.

This is particularly true for tech stocks, which are rallying strongly today.

"I think there was a real fear that if we were going to get a blue sweep they were going to go after big tech," he said.

Financial markets are not reacting the way experts thought they would today. Stocks are rallying in spite of the delayed outcome in the presidential race while traditionally safe investments are headed lower.

For example, US Treasury yields, which were up overnight when the market was still betting on a blue wave, have reversed, said Scott Minerd, global chief investment officer at Guggenheim.

But now the market is hoping for a Republican Senate and a Democrat in the White House, and that's helping markets today, because it will make for moderate policy and "put the brakes on the Green New Deal and a lot of other programs," Minerd said.

As a result, "six months from now, stocks should be higher than they are today," he said.

We still don't have a result for the election, but stocks are rallying anyway.

But the gridlock he refers to isn't the uncertainty about who will take the White House, but rather the likelihood that the Republican party will keep control of the Senate, while Joe Biden could become the next President.

For the market, this might mean moderate outcomes on the whole, and that's a positive.

"For the market, the threat of big new tax increases has dissipated," Valliere said.

Will it be same as it ever was for the tech giants, no matter who wins the election? The political talking heads might still be trying to figure out the election results -- but some of the Nasdaq's top stocks are rallying nonetheless.

The stocks of all five FAANGs -- as well as Microsoft (MSFT) -- were up between 4% and 8% in midday trading Wednesday. Tesla (TSLA) was not taking part in the post-election rally, with shares trading flat.

It's been a stunning four years of stock gains for Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), Google owner Alphabet (GOOGL), Microsoft and Tesla.

This magnificent seven of the Nasdaq is now worth about $7.9 trillion combined -- even though Trump has often been at odds with Big Tech over issues like immigration, tariffs and the president's complaints about the growing competitive clout of some of these companies.

Four years ago, this septet had a collective market value of just $2.4 trillion.