TORONTO – North American stock markets rose modestly Tuesday as investors awaited the results of a U.S. presidential election that had traders around the world watching.
Indices on Wall Street finished in positive territory for a second straight day, with the Dow Jones industrial average advancing by 73.14 points to 18,332.74 following a substantial 371-point gain on Monday.
The broader S&P 500 index moved up 8.04 points to 2,139.56, while the Nasdaq composite climbed 27.32 points at 5,193.49 points.
Wall Street rallied sharply Monday as investors became increasingly more confident that Democrat candidate Hillary Clinton will win the presidency over Republican rival Donald Trump after the FBI announced it found no evidence for criminal charges related to a recent probe into her private email server.
Stock markets view a Clinton victory as an outcome that would be more stable than a Trump win, analysts say.
“A Clinton win doesn’t necessarily represent a boon to the capital markets, but instead, it’s the notion that markets will cheer certainty and sell against uncertainty,” said Craig Fehr, a Canadian markets strategist at Edward Jones.
“At this point, regardless of your views of Trump, his candidacy and ultimately a win by Trump would represent a much larger policy uncertainty. … That’s why we’re seeing the markets find some comfort in a Clinton win, regardless of what ultimately the policies she might have down the road.”
Expect a drastic drop in the markets if Trump is declared president because that possibility has not been priced in by investors, Fehr said, whereas if Clinton is victorious, the gains are expected to be moderate.
In either scenario, the advances or declines should be short-lived until the market trains its attention back to other economic factors.
“We are going to go back when this election fervour wears off. We’re going to go back to the markets focusing on Fed policy, focusing on global growth and focusing on the domestic economy,” he said.
“Under that scenario, the president of the U.S. has an impact but is not the sole determinant on how those fundamentals move.”
Fehr noted that investors should also expect downsides in the stock markets if a conclusive election result isn’t reached by Wednesday’s opening bell.
“That represents an extra layer of uncertainty for the market as well,” he said.
“We will see a ‘Sell first and ask questions later’ scenario if we don’t have a clear-cut winner.”
In Toronto, the S&P/TSX composite index was flat, up 4.39 points at 14,656.84, helped by rising metals and materials stocks that were offset by losses in the health care sector. Shares in Valeant Pharmaceuticals (TSX:VRX) plummeted almost 22 per cent after the drugmaker warned that its financial performance will continue to deteriorate next year as it posted a $1.22-billion loss in the third quarter.
The Canadian dollar was at 75.16 cents US, up 0.38 of a U.S. cent while bellwether commodity prices were mixed.
The December crude contract rose by nine cents to US$44.98 per barrel and December natural gas was down 18 cents at US$2.63 per mmBTU.
December gold lost $4.90 to US$1,274.50 an ounce and December copper contracts were up seven cents at US$2.38 a pound.
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Note to readers: This is a corrected story. A previous version had incorrect figures for the Dow Jones and the S&P 500.