U.S. stocks rallied on the last day of the presidential election, with the S&P 500 rising 1.2% and the Dow Jones Industrial Average climbing 1%. The market was focused on the election, with uncertainty lingering due to the potential delay in results and the upcoming Federal Reserve meeting on interest rates. Investors have been making moves in anticipation of the election outcome, but experts advise against getting caught up in short-term fluctuations.
As election returns came in, Dow futures were up 0.7%, S&P 500 futures rose 0.6%, and Nasdaq futures increased by 0.4%. Florida, Kentucky, Tennessee, and Indiana were early wins for former President Donald Trump, while Vice President Kamala Harris secured victories in Democrat strongholds like Vermont and Massachusetts. In Asia, some benchmarks were moving higher in early trading on Wednesday, further exemplifying the global impact of the U.S. election.
Bond yields were on the rise, with the 10-year Treasury yield at 4.35%. Despite the uncertainty surrounding the election, many professional investors recommend focusing on the long-term performance of the market. Historical data shows that the U.S. stock market tends to rise regardless of which party wins the White House, with Democrats guiding larger increases in the market’s value. The potential impact of a split Congress and contested election results are also factors in investors’ minds.
Market performance in the aftermath of the election will also be influenced by factors such as the level of unity within Congress and the potential for contested results. Previous instances of contested elections, such as in 2000, have shown short-term declines in the S&P 500 before a resolution was reached. The hope for investors is often to maintain split control of the government to avoid drastic changes that could significantly impact the national debt.
Following President Joe Biden’s win, the S&P 500 rose 69.6%, benefiting from a rebounding economy and the avoidance of a recession despite inflation increases. Excitement about the artificial intelligence sector, along with positive reports on U.S. service business growth, contributed to the market’s strong performance. Palantir Technologies saw a significant jump in stock price after reporting strong profits driven by high demand for AI technology.
Overall, the S&P 500 rose over 70 points to 5,782.76, with the Dow and Nasdaq also seeing sizeable gains. The market’s reaction to the election results and the subsequent economic policies will continue to unfold in the coming days and weeks, as investors navigate through uncertainty and potential market fluctuations.
