Investors are sitting tight and getting ready for the polls to close

You know how the Tom Petty song goes. The waiting is the hardest part. Stocks posted strong gains on Tuesday as Americans cast their votes. But whether the market continues to rise after hours and on Wednesday (and beyond) could depend on who the next president is, how long it takes to determine the outcome, and what the makeup of Congress looks like.

Exchange-traded funds that track the Dow Jones, S&P 500 and Nasdaq-100 were all slightly higher. That could all change once several battleground states start reporting election results later this evening. Polls show the presidential race is virtually a dead end, but several market forecasts suggest former President Donald Trump has an edge over Vice President Kamala Harris.

Traders believe that a second Trump presidency would likely be good for banks due to the prospect of relaxed regulations in Washington and that energy stocks could benefit from a “drill baby drill” mentality that encourages more oil drilling rather than further investment in solar energy. and other forms of cleaner alternative energy. Small-cap stocks could also get a boost if Trump wins, on the grounds that a focus on America, including higher tariffs, could help American companies.