Closer-than-expected voting results in the U.S. presidential election sent markets seesawing early on Wednesday, as global investors watched what some had expected to be a lopsided victory become an extended nail-biter with shrinking prospects for a quick resolution.
Wall Street futures, which had surged earlier the evening, slumped into negative territory, pointing to a drop when trading begins. Stocks in Asia were headed for a mostly positive finish after dipping in the red. Future markets were calling for mild losses in Europe at the open.
One of the biggest swings was in yields for U.S. Treasury bonds, a reliable indicator of investor nervousness. Yields fell as prices rose, indicating a greater desire to park money in a safe place.
Investors saw a clearer path on Tuesday, when they priced in a relatively quick victory for Joseph R. Biden Jr., the Democratic candidate. A strong victory for him and his party could set the stage for a large pandemic relief spending package in Washington early next year. That could bolster the economy, fueling consumer spending and cushioning growth even as coronavirus cases surge again. It would also mean big deficits in the near term, potentially pushing longer-term interest rates higher.
But financial markets were whipsawed as traders and pundits saw early returns pointing to a close result, raising the possibility that President Trump could be re-elected, and the Senate remain in Republican control. On one hand, Mr. Trump’s low taxes and limited regulation have been popular among investors. On the other, analysts have been clear that a divided government could hurt the chances for a big spending package. Investors might also be wary that delayed vote counts could lead to a long period of uncertainty.
“You’re not seeing as large a blue wave as had been predicted early on,” said Gregory Daco, chief U.S. economist at Oxford Economics, around 11 p.m. New York time.
In Japan, the Nikkei rose 1.7 percent, but other markets in the region were less ebullient after a turbulent trading day. Futures markets were predicting a 1 percent drop in the S&P 500 when Wall Street opens later in the day.
The 10-year Treasury yield was down nearly 8 percent in Asian trading.
Among unscientific indicators, two Chinese stocks went on rides along with the polls based on their names. A company called Wisesoft, whose name in Chinese sounds like “Uncle Trump wisely wins,” jumped more than 7 percent at one point on the stock exchange in the city of Shenzhen.
Another Shenzhen stock, Zhejiang Giuseppe Garment, fell more than 1 percent earlier in the day. Its name in Chinese sounds a little like “Joe Biden” if spoken over a scratchy phone line.
Voters in Florida on Tuesday approved a ballot measure that would raise the state’s minimum wage to $15 by 2026.
Florida becomes the eighth state in the country to enact a minimum wage of $15, according to the National Conference of State Legislatures, but the first of them that Donald Trump carried in the 2016 presidential election. The District of Columbia has also enacted a $15 minimum wage.
Florida’s measure, known as Amendment 2, earned a place on Tuesday’s ballot in December and needed at least 60 percent of the vote to pass. With 99 percent of the vote counted, the measure had slightly more than 61 percent.
Under the measure, the state minimum wage would rise from its current hourly rate of $8.56 to $10 in September, and then increase by $1 every September through 2026. After that, annual increases would be tied to inflation.
A study by the Florida Policy Institute, a think tank backing the increase, found that the higher wage would directly benefit 2.5 million workers in the state.
A number of studies have found that moderate increases in the minimum wage have not led to significant job losses. But economists caution that the effects on employment depend on the size of the increase relative to a city or state’s wage scale.
That could make a $15 minimum wage more costly in a state like Florida, where wages tend to be substantially lower than wages in other states that have enacted a $15 minimum wage.
Sandwiched between Tuesday’s election and the Friday’s October jobs report, the Federal Reserve is set to announce its November policy decision.
There’s a good chance that the central bank will lay low at Thursday’s meeting, both because of the murky economic outlook and because the Fed is politically independent and will want to avoid inserting itself into the election storyline.
“I don’t think they want to get into anything political — anywhere near anything political,” said Gregory Daco, chief U.S. economist at Oxford Economics. Though Chair Jerome H. Powell is sure to face election-related queries at his webcast news conference, he is likely to dodge them.
“I’m sure he’s preparing in front of a mirror right now to answer some of these questions,” Mr. Daco said.
The Fed slashed interest rates to near-zero in March and has been buying about $120 billion in government-backed bonds per month to soothe markets and support demand. Officials are expected to discuss their future bond buying plans at this meeting, but economists expect them to hold off on major decisions as the economy’s path ahead remains wildly unsettled.
Manufacturing data have shown recent improvement. Spending on goods has been strong, bolstered by savings stashed away earlier in the year even as expanded unemployment benefits have lapsed and small business loans have run dry. Yet the situation could darken as consumers exhaust their savings and coronavirus cases surge, and the pace of job gains is already slowing.
Economists in a Bloomberg survey estimate that employers probably brought back or added 600,000 workers in October, a relatively small number when compared to the millions of Americans still out of work.
Fed officials have historically received key jobs numbers from the White House Council of Economic Advisers ahead of their release on Friday morning. But the secure fax containing that data has typically been sent late on Thursday afternoon, a person familiar with the process said. Officials will not know the October numbers before their meeting.
No matter who is elected, the next president will face an economy that is still reeling after the shutdowns last spring. Some areas have bounced back, but others remain deeply depressed, and millions of Americans are still out of work.
