As Americans head to the polls on Election Day, investors are bracing for potential market volatility as the race between Kamala Harris and Donald Trump remains neck-and-neck. With the outcome still uncertain, the markets are closely watching to see who will shape the economy as the next president.Navigating the Uncertainty: A Guide for Investors
Stocks Climb Ahead of Election Day
US stocks traded firmly in the green by mid-morning on Tuesday, with the tech-heavy Nasdaq Composite leading the gains, rising about 1.1%. The benchmark S&P 500 moved up roughly 0.9%, while the Dow Jones Industrial Average jumped around 0.7% after opening just above the flatline. Investors are settling in to see whether Harris or Trump will emerge victorious, as the outcome may not become clear for days or even weeks if the result is disputed.The dollar and Treasury yields traded broadly steady after retreating on Monday, as traders dialed back bets on a Trump win. The greenback nudged slightly lower, while the yield on the benchmark 10-year Treasury ticked about 4 basis points higher.
Betting Markets and Election Forecasters Point to a Close Race
Heading into Election Day, political betting app Kalshi put Trump's odds at 57%, which was akin to "a very slightly biased coin flip," according to Kalshi co-founder Tarek Mansour. A compilation of other betting markets from RealClearPolling showed the odds of a Trump win at 59.2% to 39.3%, meaning Harris would win almost four contests if the election were run 10 times.As for the polling-based election models, they projected a tighter race. Nate Silver's Silver Bulletin model found a nearly exact tie in electoral college probability, with Harris winning 50% of the time to 49.6% for Trump. The 538.com election model was another toss-up, finding Harris winning 50 out of 100 simulations, while Trump won 49 times out of 100 with a less than 1-in-100 chance of no Electoral College winner. The final analysis from the Economist magazine found a slight Harris edge, with the vice president winning 56 out of 100 hypothetical contests.
Palantir Soars on Defense Department Spending
Palantir (PLTR) stock surged 22% after the company's third-quarter earnings surpassed Wall Street's expectations due to a spike in spending from the US Department of Defense on its artificial intelligence tech. Palantir's chief revenue and legal officer, Ryan Taylor, said the company's US government business saw its "strongest sequential growth in 15 quarters driven largely by our DoD [Department of Defense] business's 21% quarter-over-quarter growth."Global government spending on Palantir's products, primarily from the US, rose 40% from the prior year to 8 million in the third quarter, accounting for 56% of the company's total revenue for the period. This was ahead of the 9 million expected for the segment, according to Bloomberg consensus estimates.
Trump Media & Technology Group Stock Rallies
Trump Media & Technology Group stock (DJT) climbed more than 10% higher in early trading on Tuesday, extending its double-digit rise to kick off the week as shares brace for more volatility with Election Day underway in the US. The stock suffered its largest percentage decline last week and closed down around 20% to end the five-day period on Friday, which shaved off around billion from its market cap. Shares have still more than doubled from their September lows.The stock's recovery comes as investors await the election of the next president: Donald Trump or Kamala Harris. Prior to the recent volatility, shares in the company, the home of the Republican nominee's social media platform Truth Social, had been on a steady rise as both domestic and overseas betting markets shifted in favor of a Trump victory. However, that lead has narrowed significantly over the weekend as new polling showed Harris surpassing Trump in Iowa, which has historically voted Republican.
A Reminder for Investors: Focus on the Long-Term
As the election results unfold, it's important for investors to remember that, no matter the outcome, it has historically paid dividends to be an investor in stocks over time. Truist co-chief investment officer Keith Lerner offered a helpful chart that serves as a good reminder for investors on Election Day, highlighting the long-term resilience of the stock market despite short-term volatility.
