(Bloomberg) — US stocks advanced as voting got underway in a presidential race that will have major consequences for the future of economic policy.
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The S&P 500 rose more than 1%, with Palantir Technologies Inc.’s upbeat earnings fueling a 24% jump in its shares. The tech-heavy Nasdaq 100 was buoyed by Nvidia Corp. and Tesla Inc.
Treasuries pared some of their earlier losses. They retreated after data showed the US service sector expanded at the fastest pace in more than two years, with 10-year yields rising five basis points to 4.34%. The dollar weakened further in afternoon trading in New York.
Markets, for now, seem to be broadly following the contours of the much-debated Trump trade — with Treasury yields, crypto and stocks all rising — though the moves were largely in-line with normal trading. The S&P 500 is famously buoyant in the session when presidential votes are cast, rising on nine of the last 11 election days with a median return of 0.8%, according to Carson Group strategist Ryan Detrick.
“Regardless of who wins tonight or whenever we get those results, it effectively is going to be a surprise,” Cameron Dawson, chief investment officer at NewEdge Wealth told Bloomberg Television. “Those polls are so very tight, which means that it could be volatility-inducing event.”
Investors are reluctant to commit to sizable positions until at least the release of the initial exit polls, said Matthew Ryan, head of market strategy at global financial services firm Ebury.
“The US election rests on a knife-edge as Americans head to the polls, with the outcome now seemingly anyone’s guess,” he said.
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Wall Street was preparing for a long night of potentially contentious ballot counting and sharp swings no matter the outcome. Goldman Sachs Group Inc. strategists said there’s a possibility of a burst of volatility in the aftermath of the election, but also pointed to the resilient US economic backdrop as likely to support equities in the long run.
The team of strategists led by Andrea Ferrario said there’s just an 18% chance of a bear market in the next 12 months — even when taking into account the risks posed by Tuesday’s presidential election. “Equities should be able to digest higher bond yields as long as they are driven by better growth,” the Goldman strategists wrote in a note.
