US election results day: S&P 500, Dow, Nasdaq rise – but will the rally hold? Trump Holds Stocks See Volatility

S&P 500, Dow and Nasdaq jump – but how long can the rally last? (image source: Times Now Digital)

Like the American elections is nearing its end, the major indices — S&P500, Dow Jones and Nasdaq closed sharply higher on Tuesday. Despite the rally, however, investors are expecting a volatile week as vote counting continues in an extremely close US presidential race.

The Dow Jones Industrial Average rose 427.28 points, or 1.02%, to 42,221.88. The S&P 500 rose 70.07 points, or 1.23%, to 5,782.76, while the Nasdaq Composite rose 259.19 points, or 1.43%, to 18,439.17.

The election is about to come to a nail-biting conclusion as the latest polls showed Republican Donald Trump and Democrat Kamala Harris in a tight race with margins expected to be very narrow. Due to the uncertainty surrounding the election results, with political pundits finding it difficult to make calls, the market has remained cautious recently, Reuters reports.

Volatility was more pronounced in the government bond and currency markets. The yield on 10-year US government bonds rose more than 10 basis points to a high of 4.366%, before falling slightly after a strong auction to end the day down 2 basis points.

Meanwhile, equity markets remained stable, driven by expectations of a soft economic landing, supported by solid corporate earnings, lower interest rates and a resilient labor market.

Economic data released Tuesday showed the trade deficit reached a 2.5-year high in September, driven by strong domestic demand and a rush to import goods ahead of possible higher tariffs under Trump’s presidency. Still, the CBOE Volatility Index (VIX), Wall Street’s ‘Fear Gauge’, finished at 20.49, slightly above the long-term average of 19.46, but lower than last week’s two-month peak of 23.42.

The S&P 500’s sectors saw industrials rise 1.67% and consumer discretionary rise 1.83%, leading the day’s gains, with five sectors up at least 1.3%. Investors are closely watching the upcoming congressional elections, with many analysts predicting a split government that could limit the president’s ability to make major policy changes.

Stocks tied to Trump are seeing volatility

Stocks linked to a potential Trump victory saw significant volatility. Trump Media & Technology Group rose 18.64% before falling 8.42%, with shares ultimately closing down 1.16%. Crypto-related stocks followed Bitcoin’s 3% rise as Trump positioned himself as a proponent of the sector. Palantir saw a 23.47% increase to close at a record $51.13 after raising its revenue forecast for the third time this year.

The Federal Reserve’s upcoming policy decision

The Federal Reserve will release its latest policy statement on Thursday, with markets largely expecting a 25 basis point rate cut. However, due to the strength of the US economy, uncertainty remains about the future pace of easing.

On the NYSE, advancing issues outpaced declining issues by a 4.44-to-1 ratio, while the Nasdaq rose 2.67-to-1. The S&P 500 posted 23 new 52-week highs and seven new lows, while the Nasdaq posted 110 new highs and 104 new lows. Total trading volume on US exchanges was 12.64 billion shares, higher than the average of 11.77 billion over the past twenty trading days.