A pandemic, a collapsing economy, and even an uncertain election result: It doesn't matter what you throw at Big Tech, it just keeps soaring.
Amid the chaos of Wednesday morning, investors poured into tech stocks. As of 10:15 a.m. EST, Apple, Amazon and Microsoft were all up more than 4%; Alphabet was up more than 5%, and Facebook more than 7%. The tech-focused Nasdaq index was up almost 4%, significantly more than the S&P 500's 2.7% gain.
While many investors went into the election expecting a Blue Wave, overnight their expectation seems to have shifted toward a Biden presidency, a Republican Senate and a Democratic House. That gridlock would mean less chance of tax hikes and difficulty in passing aggressive tech regulation, an outcome that could benefit the tech industry.
A divided Congress would also be bad news for the prospect of fiscal stimulus, and could result in a slower economic recovery. While that's terrible news for Main Street and the many businesses that rely on the physical world, it could be good news for Big Tech — as tech's performance in the past nine months has demonstrated. As Invesco's Kristina Hooper put it, a lack of stimulus means a favoring of secular growth — and "tech has been the poster child of secular growth." With Big Tech increasingly seen as a safe haven, investors may be turning to it in the hopes that it will offer protection when times are bad.
Then there's interest rates. Less fiscal stimulus and a slower recovery means the Fed will likely maintain its low interest rate policy for a very long time. As Bloomberg's Lisa Abramowicz notes, tech stocks have proven themselves to be very sensitive to rates, so the expectation of lower rates in the future is good for their stocks today.
For two stocks, though, Wednesday's boost was much simpler to explain. After Prop 22 passed, Uber and Lyft stocks skyrocketed, with investors relieved that the companies can continue operating in California without providing costly benefits to their drivers. Based on their gains Wednesday, the $200+ million they spent campaigning for the measure was well worth it.