The stock market closed strongly on Election Day, marking a day of positive momentum across major indices. The S&P 500 rose by 1.2%, the Nasdaq Composite saw a 1.4% gain, the Dow Jones Industrial Average climbed 0.4%, and the Russell 2000 outperformed with a 1.9% increase.
This rally was fueled by optimism linked to upcoming election results and robust economic indicators, particularly in the services sector.
Investor sentiment received a notable boost following the release of October's ISM Services PMI, which climbed to 56.0% from September's 54.9%, surpassing the consensus estimate of 53.5%. This reading marks the highest level since July 2022, signifying accelerating growth within the U.S. services sector—the largest segment of the economy.
The report's key highlight was the resurgence of employment activity, which returned to expansion after a brief contraction in September. However, a contraction in the Backlog Index may signal potential headwinds, hinting at a possible deceleration in growth in the future.
The positive bias observed in the markets was not significantly dampened by concerns over lingering election-related uncertainties. Although certain states might require extended periods for vote counting and recounts remain a possibility, investors appeared reassured by the prospect of clearing some of the ambiguity surrounding the election's outcome by Wednesday morning.
In addition to the macroeconomic backdrop, specific stocks had standout performances due to distinct catalysts. Palantir Technologies surged by 23.5% to close at 51.13, propelled by favorable earnings results. Similarly, DuPont and GlobalFoundries saw significant gains of 4.7% and 14.9%, respectively, following their own strong earnings reports.
Technology stocks added to the market's momentum, with the information technology sector among the top performers, driven by advances in chipmakers and select mega-cap stocks. Notably, NVIDIA rose by 2.8%, overtaking Apple in terms of market capitalization.
The consumer discretionary sector led gains, rising by 1.8%, aided by investor confidence and strong performance from key companies. This sector's strength underscores the continued resilience of consumer spending, a critical factor underpinning overall economic stability.
Treasury yields presented a mixed picture, with the 10-year yield slipping by two basis points to settle at 4.29%, while the 2-year yield edged up by three basis points to 4.21%. This yield movement occurred amid today's release of the September Trade Balance Report, which showed the U.S. trade deficit widening to $84.4 billion from August's revised $70.8 billion.
The increase in imports versus a decline in exports signals a robust domestic economy that currently outpaces global counterparts.
Commodities also showed notable activity. Crude oil prices gained $0.44 to settle at $71.92 per barrel, while gold inched up by $3.90 to $2750.20 per ounce, reflecting a steady interest in safe-haven assets. Silver and copper prices also saw marginal increases.
Looking ahead, market participants will keep an eye on upcoming data releases, including weekly MBA Mortgage Applications and EIA Crude Oil Inventories, as these reports may provide additional insights into the housing market and energy sector trends.
Overall, the solid rally on Election Day, fueled by positive economic data and investor optimism, set an encouraging tone as markets navigate the dual uncertainties of macroeconomic conditions and electoral outcomes. This resilience reflects underlying confidence in the economy's capacity to weather near-term challenges, bolstered by strong corporate earnings and sector-specific growth drivers.