NEW YORK: U.S. stocks surged to close higher on Wednesday as the presidential election race remained cloudy but the likelihood of gridlock in Congress made investors optimistic that major policy changes would be difficult to enact.
"Even if Joe Biden wins the Presidency, it looks like we are going to have a divided congress so the opportunity to have meaningful change at the fiscal level is pretty slim, and that is what is being priced into the back end of the market today," said David Joy, chief market strategist at Ameriprise Financial in Boston.
The S&P healthcare index jumped 4.45per cent to close at a record high, and the information technology sector also gained strongly, as a divided Congress means slimmer chances for heightened antitrust scrutiny, capital gains taxes and a restoration of parts of the Affordable Care Act. The healthcare index notched its biggest daily percentage gain in about seven months.
Big Pharma Pfizer , Merck & Co and Johnson & Johnson also climbed as the potentially split Congress was likely to shield the industry from sweeping reform. The NYSE Arca pharmaceutical index shot 4.66per cent higher.