Markets closed higher on Tuesday, as investors eagerly waited to gauge the results of U.S. midterm elections. This made investors put aside concerns over global trade tensions and rising interest rates, as they hoped that the result would provide some relief to stocks after suffering one of the worst Octobers.
Despite a late afternoon spike in buying, trading volume remained low, as investors preferred to hold back on making bets in case of a surprise outcome in the midterm elections. However, all three major indexes ended in positive territory.
The Dow Jones Industrial Average (DJI) gained 0.7% to close at 25,635.01. The S&P 500 advanced 0.6% to close at 2,755.45. The Nasdaq Composite Index closed at 7,375.96, gaining 0.6%. A total of 6.85 billion shares were traded on Tuesday, significantly lower than the last 20-session average of 8.7 billion shares. Advancers outnumbered decliners on the NYSE by a 1.66-to-1 ratio. On Nasdaq, a 1.58-to-1 ratio favored declining issues.
How did the Benchmark Perform?
The Dow gained 173.31 points, as shares of International Business Machines Corporation (IBM – Free Report) and Caterpillar, Inc. (CAT – Free Report) rallied. Shares of IBM and Caterpillar gained 2.6% and 2.3%, respectively. Caterpillar has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 added 17.14 points, with each of the 11 major sectors ending the day in positive territory. The gains were led by industrials and materials sectors. The Materials Select Sector SPDR (XLB) and the Industrial Service Select Sector SPDR (XLI) gained 1.6% and 1.1%, respectively.
The tech-heavy Nasdaq, which suffered on Monday after Apple’s stock decline weighed on the index, rebounded on Tuesday gaining 47.11 points. Shares of Apple Inc. (AAPL – Free Report) and Amazon.com, Inc. (AMZN – Free Report) gained 1.1% and 0.9%, respectively.
Investors Await Midterm Elections Results
On Tuesday, investors put aside concerns over rising global trade tensions and worries of rapidly rising interest rates and eagerly awaited the results of the U.S. midterm elections, which could have significant impact markets.
The midterm elections will decide which party controls Congress. Democrats are expected to take control of the House from the Republicans, while the GOP will maintain a slim majority in the Senate. Historically, stocks tend to fall before midterm elections and rally once the voting is over. Moreover, stocks have historically performed well under a divided government.
On Tuesday, investors eagerly awaited the results of the congressional elections. If Democrats take control of the House, it could lead the Congress to pursue different policy agendas. A Democratic House majority might work with the administration to try and lower drug prices. Moreover, the election could also lead to more investigations into President Donald Trump.
Fed’s Policy Meeting in Focus
Investors will also be turning their attention toward Fed Reserve, which begins its two-day policy meeting on Wednesday. The Fed is expected to hold interest rates this month. Instead the central bank is likely to deliver its fourth rate rise of the year in December. However, investors will be closely analyzing policymakers’ statement on Thursday for clues to gauge the future pace of monetary policy tightening.
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