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    Stock prices rise on Election Day as investors keep an eye on the election results
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    Stock prices rise on Election Day as investors keep an eye on the election results

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    3 minutes, 41 seconds Read

    • Polls show a close race, Trump leads the betting markets
    • Stocks linked to Trump are subject to wide fluctuations
    • Palantir Soars After Results

    NEW YORK, Nov 5 (Reuters) – U.S. stocks closed sharply higher on Tuesday in a broad rally after data signaled a solid economy, but investors braced for volatile trading this week as an extremely tight U.S. presidential election was voted on.

    The Institute for Supply Management said its non-manufacturing purchasing managers' index, a measure of the services sector, rose to 56.0 last month, the highest since August 2022, from 54.9 the previous month and above the 53rd .8, which was expected by economists polled by Reuters.
    ISM Services PMI
    ISM Services PMI
    The election result could take days to be determined as recent polls showed the race between Republican Donald Trump and Democrat Kamala Harris, which has impacted markets in recent months, is too close.

    The former president's chances improved Tuesday in betting markets, which many investors view as election indicators.

    “The market continues to try to price in the outcome of this election,” said Rob Haworth, senior investment strategist at US Bank Wealth Management in Seattle.

    “It was so tight, and even if we look at the price range we were in, we were in a tight price range, and what really drives us is marginal positioning for one outcome or the other.”

    “Both the bond market and the stock market also see Congress as important,” he added. “Most baseline scenarios assume a divided government, but this election is so close that we could have any outcome. That’s the challenge.”

    According to preliminary data, the S&P 500 (.SPX)opens new tab gained 70.42 points or 1.23% to close at 5,783.11 points, while the Nasdaq Composite (.IXIC)opens new tab rose 259.19 points or 1.43% to 18,439.17. The Dow Jones Industrial Average (.DJI)opens new tab rose 431.42 points or 1.04% to 42,227.74.

    Volatility was more pronounced in government debt and foreign exchange markets. The benchmark 10-year U.S. Treasury yield rose more than 10 basis points to a high of 4.366% before paring gains in a solid auction and was last down slightly on the day.

    Item 1 of 2 People vote for the 2024 U.S. presidential election, on election day at the Theater for the New City in Manhattan, New York City, U.S., November 5, 2024. REUTERS/Andrew Kelly

    (1/2)People vote for the 2024 U.S. presidential election, on Election Day at the Theater for the New City in Manhattan, New York City, U.S., November 5, 2024. REUTERS/Andrew Kelly License to Purchase rightopens new tab

    Stock markets escaped Monday's volatility on expectations of a soft landing for the economy, supported by corporate earnings, lower interest rates and a robust labor market.

    Other economic data on Tuesday showed the trade deficit hit a 2-1/2-year high in September as domestic demand boosts imports, while worries about higher tariffs under a Trump presidency have led companies to bring forward their imports.

    Still, the CBOE Volatility Index (.VIX)opens new tabalso known as Wall Street's “fear gauge,” was slightly above its long-term average of 19.46, although it had recovered from a nearly two-month high of 23.42 last week.
    Industry (.SPLRCI)opens new tab and Consumer Discretionary (.SPLRCD)opens new tab led to a rise in S&P 500 sectors.
    Investors are also keeping an eye on congressional elections to determine the balance of power in Washington. Many analysts are predicting a divided government that would limit the president's ability to make significant policy changes.
    Reuters Graphics bar chart using data from Evercore shows the average annual return of the S&P 500 as controlled by the White House and Congress since 1928.
    Reuters Graphics bar chart using data from Evercore shows the average annual return of the S&P 500 as controlled by the White House and Congress since 1928.
    Stocks seen as proxies for a former president's victory saw big swings, with Trump Media & Technology Group (DJT.O)opens new tab The increase rose up to 18.64% and fell up to 8.42%, but was also stopped several times due to volatility.

    Crypto stocks followed Bitcoin's rise, with the cryptocurrency gaining about 4% as Trump positioned himself as an ally to the sector.

    Palantir (PLTR.N)opens new tab rose to a record high after the data analytics company raised its annual revenue forecast for the third time.

    The Federal Reserve will release its latest monetary policy statement on Thursday. Markets have almost fully priced in a 25 basis point rate cut, but the prospects for future easing are less certain given the strength of the U.S. economy.

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    Reporting by Chuck Mikolajczak; Edited by Richard Chang

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