The Dow and S&P have closed up with the Nasdaq posting slimmer gains on the eve of the US election, as investors gird for big market swings after all three indexes notched their biggest weekly decline since March.

Market participants on Monday largely expected short-term volatility and the likelihood of major long-term policy shifts related to taxes, government spending, trade and regulation depending on whether President Donald Trump or challenger Joe Biden wins the White House race.

Biden is ahead in national opinion polls but races are tight in battleground states that could tip the election to Trump.

Analysts say the outcome most likely to shake equity markets in the near term would be no immediate winner on Tuesday night.

While the Dow and S&P were on the plus side, they ended well off session highs, and the Nasdaq dipped into the red as mega-cap technology and tech-related names struggled for traction after slumping the prior week.

Growth stocks edged up but were soundly outperformed by beaten-down value names, which tend to provide better returns coming out of recession, and notched their biggest daily percentage gain in nearly a month.

“It is hard to say whether this is a bet on sector rotation, an institutional driven bet today or if this is more traders speculating on what might happen tomorrow,” said Peter Giacchi at Citadel Securities in New York.

“The longer this plays out over the course of the week, if it takes that long, the more volatility we would expect.”

Unofficially, the Dow Jones rose 402.96 points, or 1.52 per cent, to 26,904.56, the S&P 500 gained 37.33 points, or 1.14 per cent, to 3,307.29 and the Nasdaq Composite added 35.88 points, or 0.33 per cent, to 10,947.47.

Investors betting on a Biden administration, which is expected to deliver a massive fiscal stimulus and promote green energy, have fuelled a rally in solar stocks, industrials and small-cap names in recent weeks.

On the other hand, JP Morgan has listed Bank of America , Wells Fargo and Citigroup in its “Trump basket” of stocks. The S&P banks index added about 2 per cent.

Energy, materials and industrials enjoyed the sharpest percentage gains among major S&P sectors.

The S&P 500 ended a turbulent week at near six-week lows on Friday, after quarterly reports from technology mega-caps failed to impress and as coronavirus cases surged in the US and Europe.

The weekly percentage drop was the largest since late March, which marked the end of a selloff that sent the benchmark index into a bear market, or drop of more than 20 per cent from a high.

The CBOE volatility index, known as Wall Street’s fear gauge, inched lower on Monday after ratcheting up to near four-month highs last week.

Investors will watch this week’s Federal Reserve policy meeting, the monthly jobs report and earnings from about a quarter of the S&P 500 companies.

Clorox Co shares jumped after reporting its strongest quarterly growth in more than two decades and raising its full-year revenue forecast.

Market research firm Nielsen Holdings Plc rose on plans to sell its consumer goods data unit for $2.7 billion to private equity firm Advent International.

But the S&P airlines index fell while cruise operators Carnival Corp and Norwegian Cruise Line Holdings also lost ground, reflecting fears over a relentless surge in COVID-19 cases.