US stocks rose on Tuesday, as strong earnings and easing of trade tensions lifted materials and industrial sectors but trading volumes were light as uncertainty about the outcome of US midterm elections kept investors on the sidelines. Financial markets are bracing for President Donald Trump's Republican party losing control of the House of Representatives, while retaining the Senate.
A political gridlock between the White House and Congress could hinder Trump's pro-business agenda and raise concerns about political instability, but most analysts say this may not be the worst outcome for the stock market.
Many fear there could be a sharp selloff in shares if the Democrats sweep both the House and the Senate. In contrast, stocks may rally on hopes of more tax cuts if Republicans retain control of the House.
"People are trying to figure out how to position for the mid-term election outcome here. The general view is that the outcome is predictable ... the gridlock is somewhat positive and more predictive for markets going forward," said Charlie Ripley, senior market strategist for Allianz Investment Management.
"If we see something that deviates, either a Democratic or a Republican sweep, we will see that play out tomorrow and through the rest of the week."
Ten of the 11 major S&P sectors were higher, led by a 1.34 percent gain in the materials index.
Shares of fertilizer company Mosaic Co rose 7.7 percent and building materials producer Martin Marietta Materials Inc gained 6.8 percent after strong results.
Trade-sensitive industrial sector rose 1.04 percent after Chinese Vice President Wang Qishan said Beijing was ready to hold discussions and work with the United States to resolve trade disputes.
Tariffs and interest rates pose the biggest threat to stocks in the next six months, Bel Air Investment Advisors Chairman Todd Morgan said.
"I do not want to see a tariff war, that would be bad for the economy and the market. It would diminish some of the effect of high corporate earnings," Morgan said.
At 13:06 a.m. EDT the Dow Jones Industrial Average was up 141.44 points, or 0.56 percent, at 25,603.14, the S&P 500 was up 13.93 points, or 0.51 percent, at 2,752.24 and the Nasdaq Composite was up 49.99 points, or 0.68 percent, at 7,378.84.
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