Polls in 16 states and Washington, DC, closed at 8 pm ET, and stock futures appeared to fluctuate as election results from the key race in Florida rolled in.
Uncertainty is the enemy of markets. Investors are hoping that a decisive winner emerges, sooner rather than later. Crucially, that would mean the nightmare scenario of a contested election is avoided.
In short, election results hinting at a clear winner should boost futures, and vice versa.
The Dow closed Tuesday up 555 points, or 2.1%, higher, its best percentage gain since mid-July. The S&P 500 closed 1.8% higher, its best day in a month. The Nasdaq Composite finished 1.9% higher — its best performance since mid-October.
Hopes for more government spending to help the economic recovery in the near-term boosted markets and riskier investments like stocks. The gains also reflected Wall Street’s bet that former Vice President Joe Biden will win the election.
Investors are also closely watching the results in the race for control of the US Senate. If Democrats appear poised to retake control of the Senate, that could pave the way to robust fiscal stimulus and infrastructure spending — two things markets crave. However, it could also lead to higher taxes that would cut into corporate profits.
— CNN’s Anneken Tappe contributed to this report.