Dow futures surged greater than 100 factors after Tuesday’s rally as merchants look ahead to US election outcomes

Election officials count postal ballots at a polling station in the Beloit City Fire Station on November 3, 2020 near Beloit, Wisconsin.

Scott Olson | Getty Images

Stock futures rose on Tuesday evening after a strong rally during regular trading as investors waited for the results of the presidential election.

Dow Jones Industrial Average futures traded 145 points, or 0.6%. S&P 500 futures rose 0.6% and Nasdaq 100 futures rose 0.4%.

The Georgia, Indiana, and Kentucky polls should be completed by 7:00 p.m. ET. In Pennsylvania and Florida – two major battlefield states – polls are expected to close at 8:00 p.m. CET.

Traders also increased risk overnight in other markets. The US oil futures rose 1.8% while the 10 year Treasury futures fell.

Earlier in the day, the Dow popped more than 500 points, or 2.1%. The S&P 500 was up 1.8% and the Nasdaq Composite was up 1.9%. These gains contributed to Monday’s strong performance.

This week’s market moves come as investors hoped a late or controversial US presidential election result is avoided and a clear winner emerges Tuesday night.

“This recent price surge appears to be a ‘rally of clarity’ as investors look forward to finally clearing up the excess of election uncertainty,” Vital Knowledge founder Adam Crisafulli wrote in a note Tuesday.

Former Vice President Joe Biden was ahead of President Donald Trump in polls before Tuesday. Wall Street is also watching some major Senate races that could result in Democrats taking control of Congress.

Investors are betting that a so-called blue wave – a scenario in which Democrats win the White House, get a Senate majority, and retain control of the house – could ease the passage of new fiscal stimulus as the economy drifts further out of the coronavirus pandemic recovered.

“I think no matter who wins, you have a quick dip and need to buy,” CNBC’s Jim Cramer said earlier Tuesday.

According to Baird, the S&P 500 lost an average of 0.4% the day after the presidential election.

Chao Ma of the Wells Fargo Investment Institute believes investors with a longer time horizon shouldn’t worry too much about the impact of the election on the broader market.

“The history of the economy and the S&P 500 Index suggest that a president’s party affiliation made little difference in terms of long-term returns,” said the company’s global portfolio and investment strategist. “The long-term drivers of the S&P 500 index have been economic and business gains, and we expect this will continue after the 2020 elections.”

A year after the presidential election, the S&P 500 achieved an average return of more than 8%, according to Baird in 1960.

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