Jamie Spencer
The U.S. stock market surged on Tuesday as voters across the country cast their ballots in a closely contested presidential election. The S&P 500 rose by approximately 1%, while the Dow Jones Industrial Average gained more than 300 points, marking a 0.8% increase. Meanwhile, the tech-heavy Nasdaq outpaced both indices, climbing 1.3%.
Large tech companies led the market’s gains, with shares of Nvidia, a major player in artificial intelligence chipmaking, jumping nearly 3% in early trading. Microsoft and Amazon also saw their shares rise about 1.5% by early afternoon.
Strong Market Performance Amid Positive Economic News
Tuesday’s stock market rally comes on the heels of a series of positive economic indicators. Recent government data revealed robust economic growth over the past quarter, along with continued signs of inflation cooling down. Although U.S. hiring slowed in October, the U.S. Bureau of Labor Statistics suggested that the impact of hurricanes and labor strikes may have skewed the data, leading to an undercount of workers.
Market analyst Ivan Feinseth of Tigress Financial attributed Tuesday’s gains to the anticipation of resolving the uncertainty surrounding the U.S. election. “The nightmare of an endless election and a contentious battle has consumed a lot of the focus and attention. It’s almost over. Then it goes back to the fundamentals of the market,” Feinseth explained.
Tech Stocks and AI Drive Market Optimism
The strong performance of the stock market on Election Day extended what has already been a stellar year for U.S. stocks. So far in 2024, the S&P 500 and Nasdaq have each gained more than 20%, while the Dow Jones has risen about 11%.
Feinseth noted that investor enthusiasm has been fueled by advances in artificial intelligence, resilient economic growth, and expectations that interest rates will continue to ease. Shares of major tech firms, including Nvidia, have benefited from optimism around the growing AI sector, further driving up market sentiment.
The Role of Interest Rates in the Market’s Performance
In September, the Federal Reserve cut its benchmark interest rate by half a percentage point, signaling a shift away from its prolonged fight against inflation. The rate cut provided some relief for borrowers and spurred further market gains. Investors are now expecting another rate cut—this time by a quarter percentage point—when the Fed meets on Thursday, according to the CME FedWatch Tool, which tracks market sentiment.
Lower interest rates tend to boost stock prices by reducing the cost of corporate borrowing, which in turn raises the potential for higher profits. “The market looks toward the future, and the Fed is now on the side of the bulls,” Feinseth said.
Election Uncertainty and Market Expectations
As Election Day progresses, market experts remain optimistic about the long-term outlook for stocks, regardless of whether Vice President Kamala Harris or former President Donald Trump wins the presidency. While the market is likely to continue its upward trajectory under either candidate, their policies could favor different sectors.
Trump’s proposed combination of lower corporate tax rates and looser regulation could lead to a stock market boost by bolstering corporate profits, analysts say. On the other hand, prices may increase under Harris, continuing the economic trends seen under President Joe Biden’s administration.
As the nation awaits the results of the presidential election, the stock market remains resilient, buoyed by strong tech sector performance and expectations of further interest rate cuts from the Federal Reserve.
