Big Tech Lifts US Stocks With Election Underway.

Technology stocks propelled US equities as voting got underway in a presidential race that will have major consequences for the future of economic policy.

The Nasdaq 100 rose 1.1%, with Palantir Technologies Inc. surging 20% on record profit and high demand for its artificial intelligence software. Bloomberg’s gauge for the Magnificent Seven technology companies also rose, boosted by strong gains in Tesla Inc. and Nvidia Corp.

Wall Street was also preparing for a long night of potentially contentious ballot counting and sharp swings no matter the outcome. Assets like the Mexican peso and Bitcoin, seen as some of the clearest read on the election mood, and volatility measures for Treasuries and the S&P 500 were being closely monitored.

“Regardless of who wins tonight or whenever we get those results, it effectively is going to be a surprise,” said Rebecca Patterson, former chief investment strategist at Bridgewater Associates LP told Bloomberg Television. “Those polls are so very tight, which means that it could be a volatility-inducing event.”

The S&P 500 added 0.8%. Ten-year Treasury yields rose three basis points to 4.31%.

Wall Street’s Great Election Trades Now Face the Moment of Truth.

There is a track record for stocks to do well on presidential voting day. The S&P 500 finished higher in nine of the past 11 election trading sessions in data going back to 1928, excluding some years when the NYSE was shut, according to an analysis by Carson Group. The index had an average gain of 0.9%. In the most recent example, the index posted a 1.8% advance on Nov. 3, 2020.

Still, nerves on Wall Street were running high, given that it’s been one of the most dramatic and tightly contested American presidential campaigns in modern history. Goldman Sachs Group Inc. strategists said there’s a possibility of a burst of volatility in the aftermath of the election, but also pointed to the resilient US economic backdrop as likely to support equities in the long run.

The team of strategists led by Andrea Ferrario said there’s just an 18% chance of a bear market in the next 12 months — even when taking into account the risks posed by Tuesday’s presidential election. “Equities should be able to digest higher bond yields as long as they are driven by better growth,” the Goldman strategists wrote in a note.

What David Kostin and Kevin McCarthy Are Watching as Votes Come In

Some of the attention in markets may shift later in the week to the Federal Reserve’s decision on interest rates on Thursday, and Jerome Powell’s press conference, where he’ll give details on the path for interest rates.

“The market is longing for the election to be over so that the focus can return to earnings and monetary policy,” said Susana Cruz, a strategist at Panmure Liberum.

All of that adds up to a market primed for volatility this week. Options data suggests a 1.8% move in either direction for the S&P 500 on Wednesday, according to Citigroup’s head of equity trading strategy Stuart Kaiser.

Source: https://finance.yahoo.com/news/asian-stocks-cautious-election-knife-224806193.html