S&P 500 Futures Turn Down After Trump Falsely Claims Victory With Key Votes Uncounted

U.S. stock futures turned down on Wednesday in volatile trade after President Donald Trump claimed that he had won the U.S. election even though millions of votes were still uncounted, raising the specter of a lengthy legal battle to resolve the outcome.

Democratic challenge Joe Biden had earlier said that he was confident of winning.

The knife-edge election and the prospect of an acrimonious legal battle to determine the winner pummeled the S&P emini futures EScv1 down 1.15%. That marked a sharp reversal from a 1% gain a few hours earlier, after it became apparent Trump would win the key battleground state of Florida.

Nasdaq 100 emini futures NQcv1 also pared some earlier gains to last be up 0.77%. Some investors had pointed to a lower threat of antitrust scrutiny for major technology companies under Trump than under a Biden presidency.

“Markets can take almost everything, as long it’s certain,” said Andrea Cicione, head of strategy at TS Lombard in London.

“If this were to go to the Supreme Court, then the results would take even longer and that’s probably the worst-case scenario out of all the possible ones.”

“Frankly, we did win,” Trump told supporters at the White House, adding the election was a ‘fraud on the American public’, without providing any evidence to support the claim.

Biden’s optimism stemmed from his hopes for wins in the so-called “blue wall” states of Michigan, Wisconsin and Pennsylvania that sent Trump to the White House in 2016, although vote counting could stretch for hours or days there.

His expectations for a decisive early victory had faded as television networks projected the president won in Florida, a must-win state for Trump, and took the lead in Ohio and Texas.

The surprisingly stronger initial results for Trump boosted U.S. stock futures earlier in the session, pushed down longer-dated U.S. Treasury yields from five-month highs and sharply dented Mexico’s peso and China’s yuan.

Bob Shea, Chief Executive Officer at TrimTabs Asset Management in New York, said while Trump was doing better people had defaulted to “‘Trump is good for the market’, so why not just buy now and cut to the chase.”

Investors for months have said they favor a definitive, fast resolution to the election. Quickly settling the election would clear the way for a deal on a stimulus package to help the damaged U.S. economy.

Early results also suggested the Democrats were less likely than previously expected to take the Senate from Republicans in a so-called blue wave, which could mean a more modest stimulus deal.

On election night 2016, U.S. stock index futures plunged as Trump pulled off an upset victory against Democrat Hillary Clinton. However, the next day marked the start of the so-called “Trump rally” that saw the S&P 500 jump 5% in a month, fueled by promises of massive tax cuts and financial deregulation.

The S&P 500 has climbed about 57% since Trump’s election in 2016, with the information technology index .SPLRCT surging 149% and energy .SPNY tumbling 56%, according to Datastream.

In Tuesday’s trading session, the Dow Jones Industrial Average .DJI rose 2.06%, while the S&P 500 .SPX gained 1.78% and the Nasdaq Composite .IXIC climbed 1.85%.

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