The S&P 500 rose solidly on Tuesday as traders awaited the results from a high-stakes U.S. presidential election.
The broad market index gained 1%, and the Nasdaq Composite advanced 1.2%. The Dow Jones Industrial Average climbed 347 points, or 0.8%.
The race between former President Donald Trump and Vice President Kamala Harris is expected to be tight. Close attention also remains on which party dominates Congress, given that a sweep by Republicans or Democrats could contribute to drastic spending changes or a big revamp of tax policy. (Follow CNBC's 2024 election live blog here.)
The results could have a significant effect on where stocks end the year, but investors may want to brace for some near-term choppiness. CNBC data going back to 1980 suggests the major averages gain between Election Day and the end of the year, but typically fall in the session and week after. Uncertainty over the results could lead to even more shakiness in the market.
No clear election bets were emerging in stocks on Tuesday. Instead, it appeared to be a broad rally for Wall Street.
"There's been a lot of hedging against potential uncertainty, potential drama out of Washington. We've seen that. And now as we're at Election Day, we kind of are optimistic that maybe some of that can unwind," said Ryan Detrick, chief market strategist at Carson Group.
"The reality is whoever is given the keys to the White House, if you will, is going to be taking on a car that's in pretty good shape — an economy that's in pretty darn good shape," Detrick added.
Banks, which would stand to benefit from deregulation under GOP control, were slightly higher. The SPDR S&P Bank ETF (KBE) gained 1%. Shares of Nvidia rose 3%, but the chipmaker and bull market stalwart would appear to be insulated regardless of the election's outcome. Tesla rose 4%, though the electric car stock could be seen as benefiting from a Democratic victory or a Republican one, given CEO Elon Musk's close ties to Trump.
Beyond the election, investors await the Federal Reserve's November rate decision due Thursday and fresh commentary from Chair Jerome Powell on the central bank's policy moves going forward. Traders are pricing in a 99% likelihood of a quarter-point cut following September's half-point reduction, according to CME Group's FedWatch Tool.
The S&P 500 is already up more than 20% year to date, an unusually strong run up ahead of an election, and is about 2% from its record high.
