(CBS Detroit) -- Election day has come and gone, and the country is still waiting to see whether Donald Trump or Joe Biden will be president for the next four years. As of Wednesday afternoon, multiple battleground states remained too close to call.
Despite the uncertainty, the stock market is once again reacting positively. The Dow Jones was up over 700 points early Wednesday afternoon. The S&P 500 and the NASDAQ, which is more technology-oriented, also showed significant gains in early trading. All three finished up for the day.
What does this stock market reaction mean in light of the 2020 election?
Investors like certainty. Yet, despite this truism, they're pushing stocks up. That could change if the uncertainty drags on too long. With so many Americans voting and voting early, that is a possible scenario.
Investors are afraid of a protracted and contested sorting-out process, one that adds uncertainty to the market in these already uncertain times. A contested election, seen as a worst-case scenario, could lead to sharp swings in the market.
A contested election remains a distinct possibility. Trump has already claimed victory in multiple key states where the counting of ballots continues and the race remains too close to call. He's also said that he'd take the election to the Supreme Court and tweeted "We are up BIG, but they are trying to STEAL the Election..." Twitter flagged the Tweet as misleading.
Another aspect of the stock market's positive reaction is the status of a second stimulus package. The election could help determine when such a package could pass and what form it will take.
If Biden wins, and the Democrats take over the Senate, a second round of stimulus would likely be larger. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin, had recently been negotiating a package somewhere in the range of $1.8 and $2.2 trillion. It includes a second stimulus check and additional weekly unemployment benefits from the federal government. Pelosi's framework evolved from the $3 trillion HEROES Act, which the House passed back in May, but the Senate did not take it up before the election. Pelosi has recently said, should Biden win, "we want to have as clean a slate as possible going into January."
If Trump wins, and the Senate remains in Republican hands, any stimulus package would likely be smaller. The Senate's latest attempt at stimulus amounted to $500 billion and did not include stimulus checks. It failed a few weeks ago to pass the Senate with a filibuster-proof majority. Trump supported a larger package before the election and has recently promised "a tremendous stimulus package immediately after the election."
Each of these scenarios assumes the House of Representatives remains under Democratic control. But with every Representative up for reelection, it's theoretically possible that the House changes over to the Republicans. It is unlikely, however. And, as of Wednesday afternoon, the House seemed destined to remain under Democratic control.
Likewise, the Senate looks likely to remain under Republican control, with Susan Collins of Maine winning reelection and only five winners yet to be confirmed.
The outcome of the election will determine when a second stimulus package is reconsidered. That could be in the lame-duck session that starts November 4 and runs through January 3 or after the presidential inauguration on January 20. However, Pelosi and Senate Majority leader Mitch McConnell have both recently suggested that additional federal aid will probably have to wait until the new year.
The end of the election could mean an end, or at least a dialing down, to the political posturing at least. The politics seemed to hinder any real progress on stimulus talks. The two parties, however control of the presidency and two houses of Congress shakes out, may be more willing to make a deal knowing the balance of power.
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