By Karen Langley, Rebecca Feng and Angus Berwick
U.S. stocks greeted Election Day with gains.
Major indexes were solidly higher. All 11 S&P 500 sectors gained ground, while 25 of the 30 stocks in the Dow Jones Industrial Average advanced. The tech-heavy Nasdaq Composite climbed 1.4%, leading the major indexes.
While investors have paid close attention to the contentious U.S. presidential race, and anticipate volatility if the victor remains unknown for a prolonged time, many believe that the fundamentals fueling the stock market's rally will remain in place whether Democrat Kamala Harris or Republican Donald Trump wins the election.
Those include solid corporate earnings, a resilient economy and rate cuts from the Federal Reserve. Many on Wall Street think such factors have a much greater influence on stock performance than the outcome of an election. From Trump's inauguration through the day of the 2020 election, the S&P 500 rose 48.3%, according to Dow Jones Market Data. Since President Biden was inaugurated, the index has gained about 50%.
"There's a lot of good tailwinds here for investors," said Ken Mahoney, chief executive officer at Mahoney Asset Management. "At the end of the day, this is a really good environment for stocks."
The S&P 500's 1.2% advance brought its yearly gain to around 21%, keeping the broad U.S. stock index on pace for its best election-year performance through Election Day since 1936, according to Dow Jones Market Data. The Dow Jones Industrial Average was up 1%, more than 400 points.
Palantir Technologies shares soared 22%, making them the best performer in the S&P 500, after the software company reported strong sales and raised its guidance for revenue.
Some other assets that have been viewed as "Trump trades" gained Tuesday, with prices on several prediction markets suggesting bettors viewed Trump as more likely to win than Harris.
Shares of Trump Media & Technology Group, the parent company of the Republican candidate's Truth Social network, rallied 14%. The stock is often used to bet on the former president's electoral prospects.
Bitcoin prices, which also tend to rise when investors think Trump is ahead, climbed more than 3% to top $70,000. Trump has promised to create a bitcoin "strategic reserve" and make the U.S. the "crypto capital of the planet." He also promised to give the cryptocurrency an easier ride from regulators.
Bets on a new Trump presidency have also helped boost the U.S. currency, but the WSJ Dollar Index edged down by about 0.4%, adding to a modest pullback on Monday. Investors expect higher tariffs could cause the dollar to appreciate by hurting the economies of foreign countries and driving Americans to spend less on imported goods.
Treasury yields have also climbed in recent weeks, lifted by the prospects of larger deficits under a Trump presidency and signs of persistent growth. On Tuesday, yields rose after a stronger-than-expected reading on activity in the services sector but retraced some gains after an auction of 10-year notes met with strong demand. The yield on the benchmark 10-year U.S. Treasury note traded around 4.325%, up from 4.309% on Monday.
One possible explanation for the market's upbeat mood Tuesday? Investors are closer than ever to learning the election's outcome. Whether they like the result or not, knowing it will allow them to update their investment outlooks and move on.
"Waiting is the hardest part," Mahoney said. "I think the market's hoping for a quick resolution, almost either way, and not to have this drag out for weeks or months."
-- Sam Goldfarb contributed to this article.
Write to Karen Langley at karen.langley@wsj.com, Rebecca Feng at rebecca.feng@wsj.com and Angus Berwick at angus.berwick@wsj.com
(END) Dow Jones Newswires
November 05, 2024 13:37 ET (18:37 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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