The stock market surged on Tuesday as traders eagerly awaited the results of a high-stakes U.S. presidential election. The benchmark S&P 500 index gained 1.23% to close at 5,782.76, while the NASDAQ advanced 1.43% to 18,439.17. The Dow Jones Industrial Average climbed 427.28 points, or 1.02%, settling at 42,221.88.
“America first” in one chart: if S&P 500 outperformance over Stoxx 600 is a useful barometer, Team Trump’s off to a strong start (albeit continuing a relentless trend …). In 2010 the S&P 500 to Stoxx 600 ratio was 4.2, today it is almost 12. (HT Goldman) pic.twitter.com/0ZXquDmfcI
— Holger Zschaepitz (@Schuldensuehner) November 9, 2024
The election features a tight race between former President Donald Trump and Vice President Kamala Harris.
Good Morning from Germany, where econ forecasts are being downgraded following Trump’s election. LBBW has lowered its 2025 GDP forecast from 0.7% growth to -0.2%. The Dax target has also been cut from 20,000 to 19,000, while S&P 500 target has been raised from 5,900 to 6,200… pic.twitter.com/prnih35oEL
— Holger Zschaepitz (@Schuldensuehner) November 9, 2024
Market participants are also focused on which party will dominate Congress, as this will have major implications for future fiscal policy and spending. A sweep by either Republicans or Democrats could lead to dramatic shifts in tax policy, affecting where stocks could end the year.
A week ago today I joined @ScottWapnerCNBC on @CNBCClosingBell and said it didn't really matter who wins, we were going to rally once the elect was over.
Best week of the year for stocks ? https://t.co/OHRImYEaCl
— Ryan Detrick, CMT (@RyanDetrick) November 8, 2024
Ryan Detrick, chief market strategist at Carson Group, noted that there has been a lot of hedging against potential election uncertainty. He commented, “The reality is, whoever is given the keys to the White House is going to be taking on an economy that’s in pretty good shape.”
Banks, which stand to benefit from deregulation under GOP control, saw slight gains. The financial sector rose 1.6%.
Shares of technology companies, which have tended to perform well regardless of election outcomes, also posted gains.
Market surges amid election anticipation
Tesla increased by 3.5%.
Investors are also looking forward to the Federal Reserve’s upcoming rate decision on Thursday. Traders are pricing in a roughly 98% likelihood of a quarter-point cut following September’s half-point reduction. The S&P 500 has seen a strong performance this year, up more than 21% year to date, and is nearing its record high.
In the final minutes of trading, stocks rallied, closing near the highs of the day. Market strategist Katie Stockton from Fairlead Strategies indicated that while the market might experience near-term positive action, a corrective phase could follow, leading to more stability in consumer staples stocks. Meanwhile, Cathie Wood’s ARK Innovation ETF has struggled, plunging nearly 68% since January 2021.
Despite this, technology stocks as a group have seen major growth, with the S&P 500 Technology Index up 93% over the same period. Jefferies chief market strategist David Zervos suggested that investors watch the U.S. dollar closely on election night for cues, as it will be a key indicator of market sentiment and liquidity. Citi’s Scott Chronert advised that investors might consider selling if Trump wins, given the current valuation levels, or buying if Harris wins, anticipating market dips due to initial uncertainty.
As the nation waits for the final election results, the market remains poised for potential volatility and subsequent opportunities based on the election outcome and upcoming Federal Reserve decisions.
