Overview
On Election Day, U.S. stocks rallied broadly as investors anticipated the outcome of an exceptionally tight presidential race between Republican Donald Trump and Democrat Kamala Harris. The Dow Jones Industrial Average climbed 1.04%, driven by gains in industrial and consumer discretionary stocks. The S&P 500 rose 1.23%, and the Nasdaq Composite increased by 1.43%, reflecting market optimism bolstered by positive economic data. The Institute for Supply Management reported that its non-manufacturing PMI jumped to 56.0 in October, its highest level since August 2022, surpassing expectations and signaling robust growth in the services sector.
Investor attention was also on the U.S. bond market, which saw volatility as the yield on the 10-year Treasury note briefly rose over 10 basis points to 4.366% before easing back following a solid auction. Despite recent election-driven volatility, equity markets remained stable, partly due to steady corporate earnings and a resilient labor market. The CBOE Volatility Index, known as Wall Street’s “Fear Gauge,” eased slightly, though it remained above its long-term average of 19.46, reflecting underlying uncertainty as votes were cast across the nation.
- Dow Jones Industrial Average: Rose 1.04% to 42,227.74
- S&P 500: Gained 1.23% to 5,783.11
- Nasdaq Composite: Increased 1.43% to 18,439.17
Fear & Greed Index
Neutral – Investors remain cautious, with election uncertainties balanced by economic optimism and solid corporate earnings.
Sector Performance
- Winners:
- Industrials and Consumer Discretionary: Led the gains in the S&P 500, with strong performances across stocks in these sectors as economic indicators improved.
- Crypto-Related Stocks: Benefited from a surge in Bitcoin prices, up roughly 4%, driven by Trump’s stance as a crypto sector ally.
- Losers:
- Utilities: Declined slightly as investors rotated into growth-focused sectors amid economic optimism.
- Health Care: Lagged behind other sectors, with fewer gains as attention shifted to industrial and consumer discretionary stocks.
Key Movers
- Trump Media & Technology Group (DJT.O): Experienced significant swings, gaining up to 18.64% and then dropping 8.42% as investors reacted to election developments.
- Palantir (PLTR): Surged to a record high after raising its annual revenue forecast for the third time this year.
- Crypto Stocks: Rose along with Bitcoin, as the cryptocurrency gained 4%, with Trump’s pro-crypto position impacting investor sentiment.
Economic Data
- ISM Non-Manufacturing PMI: Jumped to 56.0 in October, well above the expected 53.8, signaling strong services sector growth.
- Trade Deficit: Hit a two-and-a-half-year high in September as domestic demand boosted imports, partly due to businesses stockpiling ahead of potential tariffs under a Trump administration.
Outlook
As the tight presidential race unfolds, investors are bracing for potential delays in determining the outcome, with the balance of power in Congress also at stake. Markets are also preparing for the Federal Reserve’s policy statement on Thursday, with an expected 25-basis point rate cut largely priced in. The path for future rate cuts remains uncertain, as the Fed weighs economic resilience against inflationary pressures.
With the election outcome and rate policy on the horizon, volatility is expected to persist. Investors are watching for signals from the election that could impact policy direction and the economy, while a divided government is seen as a likely outcome that may limit sweeping legislative changes. Growth-oriented sectors like industrials and consumer discretionary are expected to maintain momentum, though market conditions remain fluid as election results unfold.
