London Daily

Focus on the big picture.
Thursday, Oct 09, 2025

The Nasdaq is skyrocketing. That may not be a great sign for the economy

The Nasdaq is skyrocketing. That may not be a great sign for the economy

When in doubt, buy Amazon.

That's the message from Wall Street as tech stocks skyrocket despite the fact no winner has been declared in the US presidential election.

The Nasdaq spiked by a staggering 3.9% Wednesday, giving the index that's home to Amazon (AMZN), Alphabet, Facebook and Microsoft (MSFT) on track for its best day in nearly seven months.

The Nasdaq is up almost twice as much as the Dow, which features more economically sensitive companies like Caterpillar (CAT) and Home Depot (HD). The Russell 2000, which is most exposed to the strength of the US economy, is barely positive at all.

In some ways, it's a replay of how tech stocks boomed during the initial phase of the recovery from the pandemic in May, June and July. The rush to buy tech stocks reflects investor sentiment that these companies will thrive even if no major stimulus package comes from a divided Congress and the economic recovery remains fragile.

"People are going back to the playbook that works if the economy is more sluggish," said Keith Lerner, chief market strategist at Truist/SunTrust Advisory. "When people get defensive about the economy, they buy tech."

Sticking with the pandemic winners as gridlock looms


Nasdaq futures rose so much overnight as election results trickled in that trading reportedly had to be halted.

Amazon, Google owner Alphabet (GOOGL) and Facebook (FB) — all winners during the pandemic — are all up 5% or more in midday trading. By contrast, companies that need a strong economy to do well, such as Ford (F), Wells Fargo (WFC) and Boeing (BA) are trading flat or losing ground.

"Just like animals, investors herd in the face of danger or uncertainty by following the strongest in the pack," Scott Yonker, associate finance professor at Cornell University, wrote in a report Wednesday. "For investors, this means pouring money into recent 'winners.'"

The key takeaway is that while the race for the White House remains in play, investors have lost confidence in a blue wave.

The chances of Democratic-control of the US Senate has plunged on prediction platform PredictIt. It now costs about 89 cents to win $1 if Republicans win the Senate, compared with just 46 cents the day before the election.

That's a crucial shift, because markets had previously expected Democrats would sweep, paving the way for powerful fiscal stimulus that would help non-tech companies.

"The only firm conclusion is that the 'Blue Wave' has receded before reaching shore, and that the prospects for a stimulus package remain undiminished," Christopher Smart, chief global strategist at the Barings Investment Institute, wrote in a report Wednesday.

What happens to fiscal stimulus now?


If Democrats controlled both the White House and the Senate, economists expected faster economic growth and a bold fiscal stimulus package worth at least $2 trillion.

That scenario led investors to buy economically sensitive stocks in the weeks ahead of the election.

"People rotated into cheap, beaten-up areas in anticipation of stimulus," said Truist's Lerner. "Now, the market is concerned about the size of the fiscal package."

Fiscal stimulus is still expected if government is divided, but it may not be as large as it would be under a blue wave.

Tech stocks also may benefit from gridlock because it lowers the chances of a sweeping crackdown from Congress. Although antitrust investigations may continue, Republicans and Democrats are unlikely to agree on major new legislation.

"The increasing likelihood of a divided Congress," wrote Mike Loewengart, managing director of investment strategy at E*Trade, "puts a damper on hopes for increased regulation against this sector."

The surge in tech stocks Wednesday stands in stark contrast to how the sector performed in 2000, when investors grappled with a contested election. But back then, investors already had lost confidence in tech stocks as the dotcom bubble imploded.

Newsletter

Related Articles

0:00
0:00
Close
France: Less Than a Month After His Appointment, the New French Prime Minister Resigns
Hungarian Prime Minister Viktor Orbán stated that Hungary will not adopt the euro because the European Union is falling apart.
Sarah Mullally Becomes First Woman Appointed Archbishop of Canterbury
Mayor in western Germany in intensive care after stabbing
Australian government pays Deloitte nearly half a million dollars for a report built on fabricated quotes, fake citations, and AI-generated nonsense.
US Prosecutors Gained Legal Approval to Hack Telegram Servers
Macron Faces Intensifying Pressure to Resign or Trigger New Elections Amid France’s Political Turmoil
Standard Chartered Names Roberto Hoornweg as Sole Head of Corporate & Investment Banking
UK Asylum Housing Firm Faces Backlash Over £187 Million Profits and Poor Living Conditions
UK Police Crack Major Gang in Smuggling of up to 40,000 Stolen Phones to China
BYD’s UK Sales Soar Nearly Nine-Fold, Making Britain Its Biggest Market Outside China
Trump Proposes Farm Bailout from Tariff Revenues Amid Backlash from Other Industries
FIFA Accuses Malaysia of Forging Citizenship Documents, Suspends Seven Footballers
Latvia to Bar Tourist and Occasional Buses to Russia and Belarus Until 2026
A Dollar Coin Featuring Trump’s Portrait Expected to Be Issued Next Year
Australia Orders X to Block Murder Videos, Citing Online Safety and Public Exposure
Three Scientists Awarded Nobel Prize in Medicine for Discovery of Immune Self-Tolerance Mechanism
OpenAI and AMD Forge Landmark AI-Chip Alliance with Equity Option
Munich Airport Reopens After Second Drone Shutdown
France Names New Government Amid Political Crisis
Trump Stands Firm in Shutdown Showdown and Declares War on Drug Cartels — Turning Crisis into Opportunity
Surge of U.S. Billionaires Transforms London’s Peninsula Apartments into Ultra-Luxury Stronghold
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Jeff Bezos Calls AI Surge a ‘Good’ Bubble, Urges Focus on Lasting Innovation
Japan’s Ruling Party Chooses Sanae Takaichi, Clearing Path to First Female Prime Minister
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Taylor Swift’s ‘Showgirl’ Launch Extends Billion-Dollar Empire
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
×