You are here
Wall St gains as investors look to US elections
[NEW YORK] Wall Street's major indexes closed higher on Tuesday as voters headed to the polls in US midterm congressional elections and investors hoped the result would provide some relief for stocks after prolonged uncertainty.
Some stocks such as CVS Health Corp and Mylan NV were boosted by strong earnings, but despite a late afternoon spike in buying, trading volume was relatively thin as many investors held back on making big bets in case of a surprise election outcome.
Wall Street had been expecting that US president Donald Trump's Republican party would lose control of the House of Representatives, while retaining the Senate.
"People are anticipating the results of the election and there's a high possibility of gridlock...There could be another leg higher if we get gridlock because the existing economic agenda won't be altered materially," said Mona Mahajan, US investment strategist, Allianz Global Investors, New York.
"There's still in people's minds the idea that there could be a surprise. Most people are waiting to see what the results are before they make any major investment decisions."
The Dow Jones Industrial Average rose 173.31 points, or 0.68 per cent, to 25,635.01, the S&P 500 gained 17.14 points, or 0.63 per cent, to 2,755.45 and the Nasdaq Composite added 47.11 points, or 0.64 per cent, to 7,375.96.
About 6.85 billion shares changed hands on US exchanges compared with the 8.7 billion average for the full session over the last 20 trading days.
Some investors said they would expect a sharp selloff, at least in the near term, if the Democrats gain control of both the House and the Senate. In contrast, stocks may rally on hopes of more tax cuts if Republicans retain control of the House. Others hoped that the elimination of election uncertainty would create a boost either way.
"What I've noticed over the last couple of weeks is people (are) back in the market. Once we get through the midterms, stocks usually go up, whatever the result, and you have to be a buyer," said Jason Ware, chief investment officer at Albion Financial in Utah.
All of the S&P's 11 major sectors showed gains, led by a 1.5 per cent rise in the materials index, which was helped by earnings reports.
Shares of fertiliser company Mosaic Co rose 10.6 per cent and building materials producer Martin Marietta Materials Inc gained 8.4 per cent after strong results.
The trade-sensitive industrial sector closed up 1.1 per cent after Chinese vice president Wang Qishan said Beijing was ready to hold discussions and work with the United States to resolve trade disputes.
"Outside of midterms, which have been priced in, we've seen some general sign of US-China trade negotiations helping sentiment," said Ryan Larson, head of US equity trading at RBC Global Asset Management in Chicago.
Healthcare stocks got a boost from Mylan, which jumped 16 per cent after the generic drugmaker reported a bigger-than-expected third-quarter profit as it sold more products in emerging markets.
Pharmacy chain CVS Health Corp rose 5.7 per cent after its results.
The health sector could be under the spotlight after the election as Mr Trump's efforts to lower prescription drug prices could get more attention should Democrats gain control in Congress.
Advancing issues outnumbered declining ones on the NYSE by a 1.66-to-1 ratio; on Nasdaq, a 1.58-to-1 ratio favoured advancers.
The S&P 500 posted 19 new 52-week highs and one new low; the Nasdaq Composite recorded 43 new highs and 68 new lows.