Dow closes up 550 points on hopes for clear US election winner

Wall Street’s main stock indexes rallied on Tuesday as investors clung to optimism that a clear winner will emerge from an exceptionally divisive United States presidential election.

The Dow Jones Industrial Average finished the session up more than 554 points or just over 2 percent at 27,480.03. It had been up more than 700 points earlier in the session.

The S&P 500 – a gauge for the health of US retirement and college savings accounts – closed up 1.78 percent, while the tech-heavy Nasdaq Composite Index finished the session up 1.85 percent.

Tuesday’s strong finishes extended Monday’s gains.

Though storefronts from New York to Los Angeles have been boarded up in case violence erupts once the polls are closed, Wall Street is looking at a glass-half-full election outcome scenario in which a clear winner is determined and a contested result is avoided.

Economists at Goldman Sachs led by Jan Hatzius wrote in a note to clients on Tuesday that “there is a good chance the presidential election outcome will be clear on election night” because Democratic presidential nominee Joe Biden leads polls narrowly in Arizona, Florida, Georgia and North Carolina – all of which are likely to report results quickly.

“Winning any of these would make it difficult for President [Donald] Trump to reach 270 electoral votes,” said Goldman.

Still, there may not be a conclusive winner on Tuesday night or even Wednesday morning if there is a protracted ballot count or the results are challenged.

Biden is ahead in national opinion polls, but the race in key battleground states is still tight enough for Trump – who is relying on a big turnout from his supporters on Tuesday – to ride to victory.

Almost 100 million Americans cast their ballots early.

“I think we will have victory,” Trump told Fox News on Tuesday. “I look at it as being a very solid chance at winning here.”

In what is sure to be a big week for Wall Street, all eyes will be on the election results before attention turns to the Federal Reserve’s two-day policy meeting on Wednesday and Thursday, and the monthly jobs report due on Friday.

Among stocks making headlines on Tuesday:

Shares of Alibaba Group Holding, which owns about a third of Ant Group, ended the session down 8.1 percent after China shocked markets by suspending the fintech giant’s blockbuster listing on the Shanghai stock exchange.

Shares of PayPal Holdings also lost 4.23 percent after the company lowered its forecast for fourth-quarter profits.

And shares of Royal Caribbean Cruises Ltd gained 0.85 percent after the company said it is suspending cruises through the end of the year.