By Noel Randewich and David Carnevali
(Reuters) – Wall Street closed higher on Tuesday on voting day in the midterm elections that will determine control of the U.S. Congress, with investors betting on a political stalemate that could stop major policy changes.
It was the third straight day of gains in the US stock market.
The S&P 500 is up about 7% from its October low but remains down about 20% in 2022 on concerns that the Fed’s aggressive rate hikes could hurt the US economy.
The S&P 500 rose 0.56% to 3,828.13 points, while the Nasdaq Composite edged up 0.49% to 10,616.20. The Dow Jones was up 1.02% to 33,160.83 points.
Of the 11 S&P 500 sector indices, 10 rose, led by materials, up 1.72%, followed by a 0.92% gain in information technology.
Helping the blue-chip Dow, shares of drugmaker Amgen Inc rose nearly 6% to a record high after the company released positive data related to its cholesterol and obesity treatment.
All 435 seats in the House of Representatives and about 35 seats in the Senate are up for a vote, with experts saying it could take a few days to be clear who has won certain races. Nonpartisan forecasts and opinion polls suggested a strong chance for Republicans to win a majority in the House and a close race for control of the Senate.
“At the end of the day, financial markets like deadlocks. Insofar as change will be slow and evolving, a divided government, of course, provides that backdrop,” said Terry Sandven, chief equity strategist at US Bank Wealth Management in Minneapolis.
A surprise victory for Democrats, however, could raise concerns about regulation of the tech sector, as well as budget spending that could add to already high inflation, according to market strategists.
Investors are also awaiting an important inflation reading forecast for Thursday, which is expected to show easing in consumer prices and provide further clues as to whether the US Federal Reserve can soften its campaign of aggressive interest rate hikes.
Traders are divided on whether the Fed will raise rates by 50 basis points or 75 basis points at the central bank meeting in December, according to CME Fedwatch.
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