London Daily

Focus on the big picture.
Tuesday, Mar 31, 2026

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
Russia Expels British Diplomat as UK Pushes Back Against Pressure
White House App Faces Scrutiny After Claims of Continuous User Location Tracking
BBC Faces Scrutiny Over Allegations of Paid Content Linked to Saudi Arabia
UK-France Coastal Patrol Agreement Nears Breakdown Amid Migration Pressures
UK Police Detain Pro-Palestine Activist Again Weeks After Bail Release
FTSE 100 Advances as Energy and Mining Shares Gain Amid Middle East Tensions
Eli Lilly Seeks UK Pricing Deal to Unlock Renewed Pharmaceutical Investment
Three Arrested in UK After Massive Cocaine Haul Discovered Hidden in Banana Shipment
UK Fuel Prices Poised for Further Surge Amid Global Energy Pressures
Apple Subsidiary Penalized by UK Authorities for Breach of Moscow Sanctions
Western Allies Intensify Coordinated Sanctions Strategy Against Russia
UK Lawmakers Face Criticism Over Renewed Push for Social Media Restrictions
Starmer Signals UK Crackdown on Addictive Social Media Features
Rising Costs Push One in Five UK Hospitality Businesses to the Brink of Closure
Man Arrested on Suspicion of Attempted Murder After Car Strikes Pedestrians in UK, Injuring Seven
Escalating Conflict Involving Iran Tightens Fiscal Pressures and Highlights UK Economic Vulnerabilities
UK Moves to Confront Russian ‘Shadow Fleet’ Operating in Its Waters
UK Housing Divide Deepens as Older Owners Hold Wealth While Under-30s Face Mounting Barriers
London Demonstration Calls on UK to Recognize Iranian Opposition’s Provisional Government
UK Green Party Vote on ‘Zionism is Racism’ Motion Collapses Amid Internal Disputes and Technical Failures
SNL UK Ignites Debate with Sharp Royal Satire Targeting Prince Andrew and Prince William
EU Proposes ‘Emergency Brake’ to Resolve Deadlock in UK Youth Mobility Talks
Thousands Rally in London to Oppose Rise of Far-Right Movements
Hong Kong Official Rejects Allegations of Surveillance Orders Targeting UK-Based Dissidents
PayPal Expands Cryptocurrency Services to Allow UK Users to Buy and Sell Bitcoin
UK Minister Challenges Reform Party’s ‘Pro-Family’ Agenda as Debate Intensifies
Concerns Grow Over Meningitis Risk Among UK Students Amid Warning Signs of New Outbreaks
Japanese Grand Prix 2026: Schedule, UK Start Times and Full Broadcast Details
Electric Vehicles Seen as Strategic Solution to UK Fuel Reserve Concerns
Rise of Lone-Actor Threats and Online Radicalisation Drives New Wave of Antisemitic Attacks in the UK
Canada Advances Plan to Ban Cryptocurrency Donations in Election Campaigns
UK Faces Looming Medicine Shortages as Iran Conflict Threatens Supply Chains
Deadly Meningitis Outbreak in the U.K. Highlights Urgent Need for Vaccination
Fresh Claims Emerge Over Harry and Meghan’s Australia Visit as Insider Speaks Out
NATO Assessment Indicates UK Defence Spending Has Fallen Below Alliance Average
FTSE 100 Slips as Middle East Tensions Weigh on Investor Sentiment
UK Economy Begins to Feel Early Impact of Iran Conflict as Policy Challenges Intensify
Russian National Jailed in UK After Assault Case Linked to Barron Trump’s Alert
Energy Price Surge Accelerates Shift Away from Fossil Fuels in UK Homes
UK Museums House More Than 260,000 Human Remains, New Report Reveals
Surging UK Gilt Yields Reflect Inflation Pressures and Fiscal Uncertainty
UK Issues Updated Guidance on Children’s Screen Time with Focus on Balance and Wellbeing
UK Migration Figures Show Shifting Trends Across Asylum, Visas and Channel Crossings
UK Watchdog Launches Probe into Five Firms Over Alleged Fake Reviews and Ratings
Jaguar Land Rover Halts Production at UK Plant Amid Supplier Disruption
UK Police Reverse Position, Confirm Arrests Will Resume for Palestine Action Protests
UK Small Businesses Face Europe’s Steepest Cost Pressures, New Survey Reveals
US Envoy Urges UK to Proceed with King’s Visit Amid Diplomatic Sensitivities
FTSE 100 Drops Over One Percent as Middle East Tensions Weigh on Markets
UK CO2 Plant Set to Reopen as Authorities Move to Safeguard Supplies Amid Middle East Tensions
×