Futures rise in choppy trade as election race tightens

US stock index futures rose in volatile trading on Wednesday as the race for the White House went down to the wire, although investors remained worried about the prospect of a contested result.

Republican President Donald Trump and Democratic contender Joe Biden both claimed they were on course for victory after results for a majority of states were called. Trump went further, claiming falsely that the election was being "stolen" from him with millions of votes still uncounted.

The knife-edge election and the prospect of an acrimonious legal battle to determine the winner sent S&P e-mini futures tumbling 1.15% earlier, but they recovered to trade up 1.23% by 7:28 a.m. ET (1228 GMT).

A delayed result is "the worst outcome we can see in a legal context and when we don't have any clarity on the government that delays the stimulus package and increases the uncertainty about the economic standing," said Kiran Ganesh, multi-asset strategist at UBS Global Wealth Management's chief investment office in London.

Trump won the battlegrounds of Florida, Ohio and Texas, dashing Biden's hopes for a decisive early victory, but the former vice president said he was confident and was on track to winning the White House by taking three key Rust Belt states.

Biden was also back as favorite to win the election in online betting markets, according to data from three aggregators, after he overtook Trump in the state of Wisconsin.

Investors have said they favor a definitive, fast resolution to the election as that would clear the way for a deal on a stimulus package to help the damaged domestic economy. Analysts have also said the market will be comfortable with a clear Trump victory.

Shares of technology mega-caps including Apple Inc, Amazon.com Inc and Nvidia Corp surged more than 2% in premarket trading with some investors pointing to a lower threat of antitrust scrutiny for Big Tech under Trump than under a Biden presidency.

Some infrastructure, renewable energy and marijuana stocks, seen as likely winners from a Biden presidency, sank as much as 5%.

"Generally, the Biden blue-wave train is favorable to mid-caps, cyclicals and stocks exposed to trade with emerging markets so people are having to move quickly back into the secular growth names and some of the traditional energy stocks," Ganesh said.

Still, the prospect of political uncertainty also sent investors to US Treasuries, sparking the biggest one-day drop in 10- and 30-year bond yields since June. Shares of US banks, which typically track Treasury yields, slipped between 1.1% and 2.5%.

By 7:28 a.m. ET, Dow e-minis were up 105 points, or 0.38%, and Nasdaq 100 e-minis were up 316 points, or 2.8%.

Meanwhile, Republicans held off Democratic challengers in five of the 14 most competitive races in the US Senate, bolstering their chances of retaining a majority in the 100-seat chamber, although the final outcome may not be clear for some time.

On election night in 2016, US futures plunged as Trump pulled off an upset victory against Democrat Hillary Clinton. However, the next day marked the start of the so-called "Trump rally" that saw the S&P 500 jump 5% in a month, fueled by promises of massive tax cuts and financial deregulation.

The S&P 500 has climbed about 57% since Trump's election in 2016, with the information technology index surging 149% and energy tumbling 56%, according to Datastream.