Big investors see a great backdrop for stocks as election results roll in

“Fearless Girl”, a bronze sculpture by Kristen Visbalthe, is seen with a voting sticker in front of the New York Stock Exchange in the Wall Street Financial District of Manhattan on November 4, 2020 in New York.

Kena Betancur | AFP | Getty Images

Big-money investors are growing more excited about the stock market as the U.S. election results keep rolling in.

CNBC’s Scott Wapner spoke with some major investors who told him we could be on the cusp of a great scenario for stocks as former Vice President Joe Biden leads President Donald Trump and Republicans are expected to keep control of the Senate.

With government divided like this, these investors are growing more confident that taxes won’t rise sharply. One investor also told Wapner a split government means there won’t be any massive government spending “to make the bond market go crazy.”

Stocks have rallied in the two sessions since Election Day. On Thursday alone, the Dow Jones Industrial Average jumped more than 400 points, putting it on track for its best weekly performance since April along with the S&P 500 and Nasdaq Composite.

Into the election, Treasury yields were rising on the expectation a so-called blue wave formed by a Democratic president and Congress would lead to a huge fiscal stimulus, among other spending programs. Yields sharply reversed lower following the election.

Market participants had largely priced in a so-called blue wave ahead of the election. Along with a bigger stimulus, some investors believed it could also lead to tougher regulations on tech and energy companies as well as higher taxes.

With a split government, however, those worries would fall significantly. And a Biden presidency likely wouldn’t escalate the China trade war, which has caused volatility in the markets, especially among tech stocks.

“What I like about the Biden win now … is we don’t get Biden; we get Biden lite,” Kevin O’Leary, chairman of O’Shares ETFs, told CNBC’s “Halftime Report” on Thursday. “That means no dramatic tax increases, nothing happens in the regulatory environment [and] no Green New Deal.”

This would be “just a slight change in course without any drama and tragedy in terms of massive changes,” he added.

According to NBC News projections, Biden was just 17 Electoral College votes away from defeating Trump. However, key battleground states Arizona, Nevada, Georgia, Pennsylvania and North Carolina have not been called for either candidate yet.

Meanwhile, it was becoming increasingly likely that Republicans would maintain a majority in the Senate as more votes were counted.

“I think a purple Congress is a much better outcome than a straight blue wave,” said Jon Najarian, co-founder of and a CNBC contributor. This “just takes the level of risks down substantially and that’s why you’re seeing money flow back” into equities.

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