U.S. stock futures rose sharply early Tuesday as investors waited for the results of the presidential election between incumbent Donald Trump and former Vice President Joe Biden.
Dow futures pointed to an opening gain of nearly 400 points. S&P 500 futures and Nasdaq 100 futures also traded in positive territory.
Stocks rebounded on Monday from an October sell-off driven by a spike in Covid-19 cases, a breakdown in economic stimulus talks, and uncertainty about the outcome of the presidential election.
On Monday, the Dow Jones Industrial Average climbed 423 points, or 1.6%. The S&P 500 also registered a gain of 1.23%. The Nasdaq Composite was the relative underperformer, adding just 0.4% as Facebook, Amazon, Apple and Microsoft all closed lower.
“Today’s strong stock market gain was fueled by technical support — a stock market which bounced decisively from its recent lows, a nod to ongoing economic momentum, despite a recent spike in Covid cases,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC. “As the election finally nears, investors who were selling on the rumor may now be buying on the news, and finally, after almost a 10% decline in the last month, buying on the dip is back.”
CNBC’s Jim Cramer said Monday that the rally in equities could be from some optimism that there will be a clear election outcome, as opposed to a contested election.
Stocks also got a boost after manufacturing activity in October jumped to its highest level in more than two years, pointing to a resilient economy in the face of the coronavirus. The ISM Manufacturing PMI rose to 59.3, a reading that indicates the percentage of companies reporting that activity expanded during the month.
Heading into Tuesday, Joe Biden holds a lead in national polling over President Donald Trump. The former vice president earned 52% of support from registered voters compared to 42% for the president, according to an NBC News/Wall Street Journal poll from Sunday. In swing states, where the election will be decided, polling averages are tighter than the national polls.
A full day before Election Day, more than 94 million votes have already been cast in the U.S, already exceeding or nearing total levels in 2016, according to the U.S. Elections Project.
Investors are also eyeing the key Senate election which will determine if the so-called Blue Wave will take over Congress. Major policy shifts, including further fiscal stimulus, depend on which parts have majority control.
The Dow had its worst month since March in October and the S&P 500 and Nasdaq both had their second straight months of losses.
In addition to the presidential election, the U.S. is also facing a surge in coronavirus cases. Coronavirus cases in the U.S. continued to rise over the weekend, with more than 81,400 new infections recorded on Sunday, according to Johns Hopkins data. That brings the seven-day average of new cases past 81,000 for the first time ever, according to a CNBC analysis of Johns Hopkins data.
After the bell Monday, Royal Caribbean Cruises cancelled all of its sailing through the end of the year. The shares fell slightly in after hours.
In Europe, the U.K. became the latest country to add new Covid-19 mitigation measures, joining France, Germany, Greece, Belgium and Austria.
Earnings season continues on Tuesday with Bayer, Fox Corp and Humana reporting before the bell.
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