Dow futures fall more than 200 points as traders await U.S. election results

FAN Editor

Election officials count absentee ballots at a polling place located in the Town of Beloit fire station on November 03, 2020 near Beloit, Wisconsin.

Scott Olson | Getty Images

Stock futures fell on Tuesday night while investors awaited the result of the presidential election.

Dow Jones Industrial Average futures slid 242 points, or 0.9%. Earlier in the evening, Dow futures jumped more than 250 points. S&P 500 futures lost 0.3%.

Futures for the tech-heavy Nasdaq 100 outperformed however, gaining 1.6%.

Other markets were making significant moves:

  • Bonds were higher with the yield on the 10-year Treasury note falling to 0.795%. Bonds were lower earlier in the evening with the yield hitting a high of 0.945%. (Yields move inversely to prices.)
  • Futures for the small-cap benchmark Russell 2000 fell 1.6%.
  • The U.S. Dollar index gained 0.8% after falling earlier.
  • U.S. oil futures gained 1%.

Futures gyrated as polls closed and states began to be called. President Donald Trump will win the presidential vote in Indiana and Kentucky along with South Dakota and Arkansas, NBC News projects. Trump is also projected to win Alabama and North Dakota. Former Vice President Joe Biden is projected to win Vermont, Delaware, Maryland and Massachusetts as well as Colorado and New York, according to NBC News.

Florida was too close to call and Pennsylvania was too early to call along with North Carolina and Ohio, NBC News said.

On Tuesday, the Dow popped more than 500 points, or 2.1%. The S&P 500 gained 1.8%, and the Nasdaq Composite advanced 1.9%. Those gains added to Monday’s strong performance.

This week’s market moves come as investors hoped a delayed, or contested, U.S. presidential election result would be avoided and a clear winner would emerge Tuesday night.

“This most recent uptick in prices seems to be a ‘clarity rally’ as investors look forward to finally having the election uncertainty overhang removed,” Adam Crisafulli, founder of Vital Knowledge, wrote in a note Tuesday.

Biden was ahead of Trump in the polls leading up to Tuesday. Wall Street is also watching some key Senate races, which could lead to Democrats taking control of Congress.

Investors are betting that a so-called blue wave — a scenario in which Democrats win the White House, obtain a Senate majority and keep control of the House — could facilitate the passing of new fiscal stimulus as the economy continues its recovery from the coronavirus pandemic.

“I think that no matter who wins, you have a quick dip and you have to buy,” CNBC’s Jim Cramer said earlier on Tuesday.

The S&P 500 lost 0.4%, on average, the day after presidential elections, according to Baird.

Chao Ma of the Wells Fargo Investment Institute thinks investors with a longer time horizon should not worry too much about the election’s impact on the broader market.

“The history of the economy and the S&P 500 Index suggests that a president’s party affiliation has made little difference when it comes to long-term returns,” said the firm’s global portfolio and investment strategist. “The long-term drivers of the S&P 500 index have been the economy and business earnings, and we expect that to continue to be the case … beyond the 2020 elections.”

One year out from a presidential election, the S&P 500 averaged a return of more than 8%, according to the Baird data back to 1960.

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