Technology stocks have pushed Wall Street’s major averages higher as the race for the White House went down to the wire, although investors remained worried about the prospect of a contested result.
In a race that has been too close to call, both President Donald Trump and Democratic nominee Joe Biden still have possible paths to reach the needed 270 Electoral College votes to win as states keep counting a surge in mail-in ballots.
Ten of the 11 major S&P indexes were up in morning trading led by information technology and healthcare sectors as investors said chances faded for Democrats to score a big win in the US Senate, lowering bets of higher antitrust scrutiny and capital gains taxes.
“What’s emerging for me is that not much is going to change as a result of this election, even if Biden wins,” said Peter Kraus, a former Goldman Sachs executive who founded asset management firm Aperture Investments in 2018.
“The Senate is unlikely to flip. Stimulus bills, investments in infrastructure, significant fiscal spending and tax changes look in a rear view mirror as opposed to the front mirror.”
Trump won the battlegrounds of Florida, Ohio and Texas but former Vice President Biden said he was confident and was on track to winning the White House by taking three key Rust Belt states.
Biden was also back as favourite to win the election in online betting markets, according to data from three aggregators, after he overtook Trump in the state of Wisconsin.
Investors have said they favour a definitive, swift resolution to the election as that would clear the way for a deal on a stimulus package to help the damaged domestic economy.
Analysts have also said the market will be comfortable with a clear Trump victory.
The NYSE FANG+TM Index, which includes the core FAANG stocks, jumped 3.5 per cent.
However, some infrastructure, renewable energy and marijuana stocks, seen as likely winners from a Biden presidency, sank as much as 8.0 per cent.
The CBOE volatility index, a gauge for short-term volatility, slipped to a two-week low after spiking to a four-month high in the run-up to the election.
Still, the prospect of political uncertainty sent investors to US Treasuries, sparking the biggest one-day drop in 10- and 30-year bond yields since June.
Shares of US banks, which typically track Treasury yields, slipped 2.0 per cent.
In early trading on Wednesday, the Dow Jones Industrial Average was up 632.64 points, or 2.30 per cent, at 28,112.67, the S&P 500 was up 100.78 points, or 2.99 per cent, at 3,469.94 and the Nasdaq Composite was up 453.66 points, or 4.06 per cent, at 11,614.24.
Materials was the only S&P index in the red.
Advancing issues outnumbered decliners by a 1.67-to-1 ratio on the NYSE and the Nasdaq.
The S&P index recorded 38 new 52-week highs and no new low while the Nasdaq recorded 70 new highs and nine new lows.