US equity benchmarks rose on Tuesday ahead of the long-awaited election results.
The outcome of the election could take days even as opinion polls forecast a tight battle between Vice President Kamala Harris and former President Donald Trump.
At the time of writing, the S&P 500 index rose 0.9%, while the Nasdaq Composite climbed 1.1%. The Dow Jones Industrial Average advanced 326 points, or 0.8% from the previous close.
The market is also focused on which of the parties the Republicans and Democrats gain a majority in Congress. A clean sweep by either of these parties could bring in drastic changes in policy-making and spending.
Meanwhile, Treasury yields eased on Tuesday, while stocks of mega-cap technology companies rose.
Uncertainty over the election result could increase choppiness in the stock market.
Alicia Levine, head of investment strategy and equities at BNY Wealth told CNBC:
We’re positive on the market regardless of what happens tonight, today. We think Congress will be a divided Congress. That’s going to be the most positive thing of all.
Beyond elections, the market will also focus on the policy decision of the Federal Reserve on Thursday. The Fed is expected to cut interest rates by 25 basis points.
According to the CME FedWatch Tool, traders have priced in a 98%probability of the US central bank cutting rates by 25 bps.
Technology, chip stocks rise
Shares of NVIDIA Corporation rose 2%, but analysts believe the stock could continue its bull run regardless of the election outcome.
Shares of Tesla also rose more than 3% as the stock would benefit from a Trump win, given CEO Elon Musk’s close ties with the former president.
Upbeat forecasts from chipmaker GlobalFoundries lifted the stock 9%, while Palantir gained 16% on strong quarterly earnings results.
Rate-sensitive megacap growth stocks rose, powered by Meta Platforms, which increased nearly 2% on Tuesday.
“There’s certainly a lot of anxiety about the election result, but (good) economic data, Fed cutting rates, earnings coming in pretty strong can overwhelm that anxiety,” Ross Mayfield, an investment strategy analyst at Baird, told Reuters.
Trump Media surges
Shares of Trump Media and Technology Group jumped 16% with traders betting a second Trump presidency would boost the business prospect.
The DJT stock is also seen as a proxy for the Republican candidate’s prospects of retaking the White House, according to CNBC.
Meanwhile, shares of prison operator Geo Group also gained nearly 6% on Tuesday.
Chemical stock Celanese tanks
Shares of Celanese were the worst performer in the S&P 500 index on Tuesday.
The stock tanked 25% after the company said it would slash its quarterly dividend by 95% due to the “current demand environment”.
The company also missed analysts’ expectations for its quarterly earnings. It reported $2.44 in adjusted earnings per share on $2.65 billion in revenue.
Analysts surveyed by FactSet were expecting the company to post adjusted earnings of $2.85 per share on $2.70 billion in revenue.
Service sector reading hits highest since 2022
Service sector activity in the US during October expanded at its fastest pace in more than two years, according to an Institute of Supply Management survey on Tuesday.
The ISM services index indicated that 56% of the firms in the US posted growth during October, up from 54.9% from the previous month. It was the fastest pace since July 2022.
Economists at Dow Jones had expected the index to expand 53.7%.
The survey showed that growth came in employment, and supplier deliveries, while the prices index fell and new export orders dropped sharply.
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