S&P 500 futures rise as U.S. election results trickle in

11/07/2018

(Reuters) – U.S. stock futures rose in volatile trading on Tuesday after a closely followed forecasting website said chances had fallen that the Democratic party would win the House of Representatives in U.S. midterm congressional elections.

In line with opinion polls, Wall Street had been expecting that President Donald Trump’s Republican party would lose control of the House while retaining the Senate, setting up gridlock in Washington.

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S&P 500 futures drop as U.S. election results trickle in

S&P 500 e-mini futures EScv1 rose 0.4 percent as election results trickled in and as polling website FiveThirtyEight said the likelihood of the Democrats winning the House had decreased to just over 50 percent. Earlier, FiveThirtyEight gave the Democrats more than a 90 percent chance of winning the House.

“The House results so far are showing a better-than-expected performance for the Republicans, even if they don’t keep the House,” said Steven Englander, global head of G10 FX Research at Standard Chartered Bank, New York. “So it doesn’t look like a big blue wave, and Republicans might do a bit better than expected in the Senate.”

During Tuesday’s trading session, stock market indexes closed higher, but trading volume was thin as investors held back on making big bets ahead of voting results.

Following a steep selloff in October, the S&P 500 remains down more than 5 percent from its record high, with investors worried a decade-old bull market may be ending.

Some investors have said that they would expect a drop, at least in the near term, if the Democrats gain control of both the House and the Senate. In contrast, stocks may rally on hopes of more tax cuts if Republicans retain control of the House.

Sweeping corporate tax cuts passed by the Republicans last year have supercharged earnings growth.

Other investors said the elimination of election uncertainty could create a boost either way.

In Tuesday’s trading session, the Dow Jones Industrial Average .DJI rose 0.68 percent to end at 25,635.01 points, while the S&P 500 .SPX gained 0.63 percent to 2,755.45.

The Nasdaq Composite .IXIC added 0.64 percent to 7,375.96.

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