NEW YORK: US stock indexes rose for the third straight session on Tuesday as voting began in the crucial midterm election that will determine control of Congress, with investors hoping for a political gridlock which could prevent radical policy changes.
Ten of the 11 S&P sectors advanced, led by materials, which rose 2.5% and was up for the fourth consecutive session. Rate-sensitive technology stocks gained 2% as Treasury yields took a breather.
Helping the blue-chip Dow outperform its Wall Street peers, shares of drugmaker Amgen Inc climbed 6.5% to a record high after reporting positive data related to its cholesterol drug and obesity treatment.
All 435 House of Representative seats and 35 Senate seats are on the ballot, with experts saying there maybe days of waiting before it is clear who won. Nonpartisan forecasts and opinion polls suggested a strong chance of Republicans winning a House majority and a tight race for Senate control.
Investors too are expecting a similar outcome as control of even one chamber of Congress by Republicans would put a check to President Joe Biden’s legislative push for more business regulations and help curb spending from the current administration.
Shares in healthcare, energy and defense sectors could see more volatility in the wake of the election.
“The House is going to go to Republicans, that’s just the history of it. There could be an upside surprise if the Senate goes strongly Republicans,” said Jay Hatfield, chief executive officer of Infrastructure Capital Management.
“We are really looking at the defense sector as the clear winner because (if) Congress is controlled by the Republicans, we are clearly going to have higher defense spending.” A surprise victory for Democrats, however, could raise concerns about tech sector regulation as well as budget spending that could add to an already high inflation, according to market participants.
Investors are also awaiting a key inflation reading due on Thursday, which is expected to show easing in consumer prices and provide further clues on whether the US Federal Reserve could shift to smaller interest rate hikes.
Traders are currently divided about whether the Fed will raise rates by 50 basis points or 75 basis points at the central bank’s meeting in December, according to CME Fedwatch tool. The S&P 500 is up more than 10% from its October lows, but has still posted steep losses this year on worries that aggressive monetary policy tightening would tip the US economy into a recession.
At 12:00 p.m. ET, the Dow Jones Industrial Average was up 517.96 points, or 1.58%, at 33,344.96, the S&P 500 was up 46.70 points, or 1.23%, at 3,853.50, and the Nasdaq Composite was up 154.36 points, or 1.46%, at 10,718.88.
Semiconductor stocks gained 3%, driven by a 3.2% rise in chipmaker Nvidia Corp.
Take-Two Interactive Software Inc fell 9.9% after the videogame publisher lowered its annual sales outlook, while ride-hailing firm Lyft Inc dropped 21.1% on forecasting current-quarter revenue below Wall Street estimates.
Advancing issues outnumbered decliners by a 3.36-to-1 ratio on the NYSE and by a 1.91-to-1 ratio on the Nasdaq.
The S&P index recorded 20 new 52-week highs and seven new lows, while the Nasdaq recorded 72 new highs and 169 new lows.