The U.S. stock market saw broad gains on Tuesday as investors kept a close watch on the high-stakes presidential election, with the race between former President Donald Trump and Vice President Kamala Harris anticipated to be a tight one. The outcome could have significant implications for tax policies and government spending, especially depending on which party gains control of Congress.
- S&P 500: The benchmark index advanced by 1.23%, closing at 5,782.76 in a broad-based rally.
- Nasdaq Composite: The tech-heavy index gained 1.43%, settling at 18,439.17.
- Dow Jones Industrial Average: The Dow climbed by 427.28 points or 1.02%, ending the session at 42,221.88.
Historically, markets tend to gain between Election Day and the end of the year, though they often see volatility immediately following the election. According to CNBC’s data dating back to 1980, the markets generally experience a dip in the session and week after Election Day. This year, investors may need to brace for additional choppiness due to uncertainties surrounding both the presidential race and Congressional outcomes.
As investors speculated on possible outcomes, no clear election-specific bets dominated Tuesday’s rally. Instead, it seemed like a broad, cautious optimism as hedges against uncertainty appeared to ease slightly. “We’re optimistic that some of the hedging can unwind as we reach Election Day,” said Ryan Detrick, chief market strategist at Carson Group. Detrick noted that the incoming president, regardless of the result, would inherit an economy “in pretty darn good shape.”
Sector Highlights
- Banks: The SPDR S&P Bank ETF (KBE) rose by 1.6%, reflecting hopes of deregulation under potential GOP control.
- Nvidia: The chipmaker gained nearly 3%, showcasing resilience regardless of the election outcome due to its strong market position.
- Tesla: Shares increased by 3.5%, with the stock positioned to benefit regardless of the winning party due to CEO Elon Musk’s ties with both Trump and potential Democratic policies favoring green energy.
In addition to the election, investor attention is also focused on the Federal Reserve’s upcoming November rate decision scheduled for Thursday. With traders pricing in a 98% likelihood of a quarter-point cut following September’s half-point reduction, Fed Chair Jerome Powell’s commentary will be closely analyzed for future policy direction.
The S&P 500 has risen by over 21% year-to-date, marking an unusually strong performance ahead of an election and approaching record highs.
