A Biden administration and divided Congress is 'nirvana for growth stocks,' Jim Cramer says

Americans appear to want divided government, and that could spell good news for growth stocks, CNBC's Jim Cramer said Wednesday.

"Finally, we can stop fretting about politics and start focusing on business and your money again, because a divided Congress and a blue White House … is nirvana for growth stocks," the "Mad Money" host said.

With Democratic nominee Joe Biden on the cusp of winning the White House and Republicans likely to retain control of the Senate after Tuesday's election, Cramer projects that the status quo will dim chances that lawmakers raise capital gains taxes as the former vice president has proposed in his tax plan.

"They don't want upheaval, and they certainly don't want higher taxes, something that would've been on the agenda if the so-called blue wave had washed over Washington," Cramer said, noting that it would impact portfolios. "It increasingly looks like Biden's going to win, but he'll have to govern with a Republican Senate."

The comments came after Wall Street extended its winning streak for a third-straight session, with the tech-heavy Nasdaq Composite roaring 3.85% higher to 11,590.78. The S&P 500 gained 2.21% on the day, closing at 3,443.44, and the Dow industrial index climbed more than 367 points higher, or 1.34%, to 27,847.66.

Stocks climbed higher as election results continued to roll in. The presidential race has yet to be called as key battleground states continue to count ballots. Meanwhile, Democrats have retained power in the House of Representatives. The party also had hoped to gain at least four seats and, in turn, gain control in the Senate, but Majority Leader Mitch McConnell and Republicans have dimmed those chances.

"Money managers had been dumping growth stocks and swapping into more cyclical value names, betting on a massive federal spending project come January," Cramer said. "Sure enough, we're now seeing a gigantic — maybe the largest I've ever seen — rotation back out of value and into growth in tech because the blue wave stimulus cavalry [is not] coming."

After rising on Monday, the bank, oil and industrial stocks took a hit Wednesday. The SPDR S&P Bank ETF, or KBE, tumbled more than 5% and Caterpillar plunged more than 7%. Honeywell, 3M and JPMorgan Chase, stocks Cramer said benefited from the market rotation on Monday, all fell during the trading day.

Tech stocks, one of the strongest performing cohorts on the market this year, surged. Amazon, Microsoft and Facebook, whose stocks sold off days after reporting quarterly results last week, rallied high-single digits. Advanced Micro Devices surged 8% and Apple rallied more than 5%.

"We don't know for sure who will win this thing ... even if it's looking good for Biden at the moment," Cramer said. "However, I think the electorate has spoken and whatever way this thing goes, there will be a peaceful transfer of power."

Disclosure: Cramer's charitable trust owns shares of Facebook, Amazon, Microsoft, Apple, Honeywell, JPMorgan Chase and Advanced Micro Devices.

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