NEW YORK (Reuters) - Wall Street’s major indexes closed higher on Tuesday as voters headed to the polls in U.S. midterm congressional elections and investors hoped the result would provide some relief for stocks after prolonged uncertainty.
Some stocks such as CVS Health Corp (CVS.N) and Mylan NV (MYL.O) were boosted by strong earnings, but despite a late afternoon spike in buying, trading volume was relatively thin as many investors held back on making big bets in case of a surprise election outcome.
Wall Street had been expecting that President Donald Trump’s Republican party would lose control of the House of Representatives, while retaining the Senate.
“People are anticipating the results of the election and there’s a high possibility of gridlock ... There could be another leg higher if we get gridlock because the existing economic agenda won’t be altered materially,” said Mona Mahajan, U.S. Investment Strategist, Allianz Global Investors, New York.
“There’s still in people’s minds the idea that there could be a surprise. Most people are waiting to see what the results are before they make any major investment decisions.”
The Dow Jones Industrial Average .DJI rose 173.31 points, or 0.68 percent, to 25,635.01, the S&P 500 .SPX gained 17.14 points, or 0.63 percent, to 2,755.45 and the Nasdaq Composite .IXIC added 47.11 points, or 0.64 percent, to 7,375.96.
About 6.85 billion shares changed hands on U.S. exchanges compared with the 8.7 billion average for the full session over the last 20 trading days.
Some investors said they would expect a sharp selloff, at least in the near term, if the Democrats gain control of both the House and the Senate. In contrast, stocks may rally on hopes of more tax cuts if Republicans retain control of the House. Others hoped that the elimination of election uncertainty would create a boost either way.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., November 5, 2018. REUTERS/Brendan McDermid
“What I’ve noticed over the last couple of weeks is people (are) back in the market. Once we get through the midterms, stocks usually go up, whatever the result, and you have to be a buyer,” said Jason Ware, chief investment officer at Albion Financial in Utah.
All of the S&P’s 11 major sectors showed gains, led by a 1.5 percent rise in the materials index .SPLRCM, which was helped by earnings reports.
Shares of fertilizer company Mosaic Co (MOS.N) rose 10.6 percent and building materials producer Martin Marietta Materials Inc (MLM.N) gained 8.4 percent after strong results.
The trade-sensitive industrial sector .SPLRCI closed up 1.1 percent after Chinese Vice President Wang Qishan said Beijing was ready to hold discussions and work with the United States to resolve trade disputes.
“Outside of midterms, which have been priced in, we’ve seen some general sign of U.S.-China trade negotiations helping sentiment,” said Ryan Larson, head of U.S. equity trading at RBC Global Asset Management in Chicago.
Healthcare stocks .SPXHC got a boost from Mylan (MYL.O), which jumped 16 percent after the generic drugmaker reported a bigger-than-expected third-quarter profit as it sold more products in emerging markets.
Pharmacy chain CVS Health Corp (CVS.N) rose 5.7 percent after its results.
The health sector could be under the spotlight after the election as Trump’s efforts to lower prescription drug prices could get more attention should Democrats gain control in Congress.
Advancing issues outnumbered declining ones on the NYSE by a 1.66-to-1 ratio; on Nasdaq, a 1.58-to-1 ratio favored advancers.
The S&P 500 posted 19 new 52-week highs and one new low; the Nasdaq Composite recorded 43 new highs and 68 new lows.
Additional reporting by April Joyner in New York and Sruthi Shankar in Bengaluru; Editing by Anil D'Silva and James Dalgleish
Our Standards:The Thomson Reuters Trust Principles.
