Wall Street opened on a high note Tuesday as investors expressed confidence that a clear winner would be declared in the U.S. election and that a fiscal stimulus deal would be swiftly passed.
The Dow Jones Industrial Average rose by just over 320 points after the opening bell rang on Election Day, with the S&P 500 gaining 1 percent and the Nasdaq composite rising by around 0.75 percent.
“Ultimately, the markets want clarity, and the main threat this week is the emergence of a contested election,” Tom Essaye, founder of The Sevens Report and a stock market analyst, wrote in a note. "If races are tight enough for campaigns to sue to halt or extend recounts, expect a reversal."
The rally comes just one week after the market's worst performance in seven months, when the Dow fell by 940 points after soaring coronavirus infection rates triggered a new round of restrictive measures, including monthlong lockdowns in some parts of Europe.
While Wall Street has typically been lukewarm on a Democratic government, the pandemic has changed that. A "blue wave," wherein Democrats gain control of the White House and both chambers, is seen as far more likely to implement a large stimulus plan.
Investors are also preparing for the Federal Reserve's two-day monetary policymaking meeting on Wednesday and Thursday, and the monthly jobs report, which the Bureau of Labor Statistics will release on Friday morning.
"The Federal Reserve’s outlook suggests the U.S. won’t get back to full employment until 2023," said Mark Hamrick, senior economic analyst at Bankrate. "Among the wildcards are the outcome of the election, dictating policy decisions, and the timing and availability of safe and effective vaccines."