Stocks rally for third day ahead of midterm election results, Dow closes 300 points higher

Stocks rose on Tuesday as investors awaited the results of the U.S. midterm election, which could affect future levels of government spending and regulation.

The Dow Jones Industrial Average gained 333.83 points, or 1.02%, to 33,160.83. The S&P 500 rose 0.56% to 3,828.11. The Nasdaq Composite advanced 0.49% to 10,616.20. The three indexes recovered for a third consecutive day.

Market participants expect Republicans to retake the House of Representatives and possibly win the Senate as well when the results start rolling Tuesday night. Investors tend to like the notion of a deadlock in Washington with a divided Congress and President because it will limit government spending, new taxes and regulations.

“If we have a stalemate, that’s probably the best thing that can happen for the market. Markets usually do very well when that happens,” said Seth Cohan of The Wealth Alliance.

Overall, history shows that markets tend to gain at the end of the year and up to 12 months after the midterm elections, as investors are relieved to have clarity on future policy. A wild card would be if several races that could determine congressional control are too close to be called, an outcome that could weigh on markets on Wednesday.

“The financial market’s reaction to a Republican victory should be muted, since the House outcome is already widely expected, and the Senate outcome makes less of a difference to political outcomes if Republicans control the House,” Jan Hatzius wrote. of Goldman Sachs in a Monday. Remarks.

“A surprise Democrat victory in the House and Senate would likely weigh on stocks as market participants could expect further corporate tax increases,” Hatzius added.

Shares hit their highs on Tuesday afternoon, with the Nasdaq down 0.9% at one point, amid a broader cryptocurrency selloff. Crypto prices fell after the world’s two largest crypto exchanges, Binance and FTX, reached a merger agreement to solve the latest “liquidity crisis”. Bitcoin hit a low of $17,300.80, its lowest level since November 2020.

“Crypto is a good indicator of investor risk sentiment more broadly,” said Zachary Hill of Horizon Investments.

SolarEdge Technologies was the top outperformer in the broader market index, up 19% after posting record revenue in its latest quarter. Elsewhere, Kohl’s shares jumped 7% after the department store chain announced the departure of its CEO next month.

Meanwhile, the actions of Lyft fell nearly 23% on disappointing quarterly results. Interactive Take-Two and Tripadvisor fell 13.7% and 17.3%, respectively, after the earnings release.

Read today’s market coverage in Spanish here.


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