Dow futures rise more than 100 points after Tuesday's rally as traders await U.S. election results

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Election officials count absentee ballots at a polling place located in the Town of Beloit fire station on November 03, 2020 near Beloit, Wisconsin.

Scott Olson | Getty Images

Stock futures were flat on Tuesday night following a sharp rally during regular trading while investors awaited the result of the presidential election.

Dow Jones Industrial Average futures traded 56 points lower, or 0.2%. S&P 500 futures dipped 0.1% and Nasdaq 100 futures rose slightly. Earlier in the evening, Dow futures had jumped more than 250 points.

President Donald Trump will win the presidential vote in Indiana and Kentucky, NBC News projects. Florida was too close to call and Pennsylvania was too early to call, NBC News said. Former Vice President Joe Biden is projected to win Vermont, Delaware, Maryland and Massachusetts, according to NBC News. Polls in Arizona, Colorado and New York were scheduled to close at 9 p.m. ET.

Earlier in the day, the Dow popped more than 500 points, or 2.1%. The S&P 500 gained 1.8% and the Nasdaq Composite advanced 1.9%. Those gains added to Monday’s strong performance.

This week’s market moves come as investors hoped a delayed, or contested, U.S. presidential election result would be avoided and a clear winner would emerge Tuesday night.

“This most recent uptick in prices seems to be a ‘clarity rally’ as investors look forward to finally having the election uncertainty overhang removed,” Adam Crisafulli, founder of Vital Knowledge, wrote in a note Tuesday.

Biden was ahead of Trump in the polls leading up to Tuesday. Wall Street is also watching some key Senate races, which could lead to Democrats taking control of Congress.

Investors are betting that a so-called blue wave — a scenario in which Democrats win the White House, obtain a Senate majority and keep control of the House — could facilitate the passing of new fiscal stimulus as the economy continues its recovery from the coronavirus pandemic.

“I think that no matter who wins, you have a quick dip and you have to buy,” CNBC’s Jim Cramer said earlier on Tuesday.

The S&P 500 lost 0.4%, on average, the day after presidential elections, according to Baird.

Chao Ma of the Wells Fargo Investment Institute thinks investors with a longer time horizon should not worry too much about the election’s impact on the broader market.

“The history of the economy and the S&P 500 Index suggests that a president’s party affiliation has made little difference when it comes to long-term returns,” said the firm’s global portfolio and investment strategist. “The long-term drivers of the S&P 500 index have been the economy and business earnings, and we expect that to continue to be the case … beyond the 2020 elections.”

One year out from a presidential election, the S&P 500 averaged a return of more than 8%, according to the Baird data back to 1960.

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