The Dow Jones gained over 400 points, recovering all of Monday’s losses and more, while the S&P 500 rose 1.2%. The Nasdaq Composite also advanced by 1.4% in Tuesday’s trading session.
The broad rally in stocks was consistent with votes past: the S&P 500 has gained on nine of the last 11 election days with a median return of 0.8%, according to Carson Group strategist Ryan Detrick.
CNBC data going back to 1980 suggests the major averages gain between Election Day and the end of the year, but typically fall in the session and week after. Uncertainty over the results could lead to even more shakiness in the market.
Amidst all the election frenzy, the US Services sector expanded in October at the fastest pace in over two years, fueled by a pick-up in hiring.
The Institute for Supply Management’s non-manufacturing index increased to 56 in October, the highest since July 2022, data showed Tuesday. The figure topped all but one forecast in a Bloomberg survey of economists. Readings above 50 signal growth.
“Regardless of who wins tonight or whenever we get those results, it effectively is going to be a surprise,” Cameron Dawson at NewEdge Wealth told Bloomberg Television. “Those polls are so very tight, which means that it could be volatility-inducing event.”
Goldman Sachs Group Inc. strategists said there’s a possibility of a burst of volatility in the aftermath of the election, but also pointed to the resilient US economic backdrop as likely to support equities in the long run.
The team of strategists led by Andrea Ferrario said there’s just an 18% chance of a bear market in the next 12 months — even when taking into account the risks posed by Tuesday’s presidential election. “Equities should be able to digest higher bond yields as long as they are driven by better growth,” the Goldman strategists wrote in a note.
Markets now await the Federal Reserve’s interest-rate decision on Thursday, and Jerome Powell’s press conference, where he’ll give details on the path for interest rates.
(With Inputs From Agencies.)