US Stocks Set For Cautious Start As Investors Brace For Volatility On Election Day: Expert Points To 'Pretty Well Overall' Historical Performance

U.S. stocks could open on a tentative note on Tuesday after the averages registered a mixed October. Futures of all three major indices were slightly up on Tuesday, pointing to a cautious sentiment on Wall Street.

While the S&P 500 and Dow Jones snapped their six-week winning streak, the Nasdaq Composite chalked its seventh straight week of gains to round off a volatile October.

America goes to polls on Tuesday to elect its 47th president, and data so far suggests that it will be a neck-to-neck race between Democratic candidate Kamala Harris and Republican nominee Donald Trump.

Another factor playing on investors' minds will be the Federal Open Market Committee's (FOMC) rate decision – the prevailing sentiment is that the Fed will deliver a 25-basis point cut.

Futures	Performance (+/-)
Nasdaq 100	0.27%
S&P 500	0.16%
Dow Jones	0.12%
R2K	0.05%

In premarket trading on Tuesday, the SPDR S&P 500 ETF Trust SPY rose 0.16% to $570.71 and the Invesco QQQ ETF QQQ edged up by 0.25% to $487.24, according to Benzinga Pro data.

Cues From Last Session:

The Dow Jones tumbled over 250 points on Monday, closing the day down by 0.61%. The other two averages also declined amid declining investor sentiment and rising fear in the market.

Oil prices continued to rebound after tanking the week before, amid delays in production output increase by the Organization of the Petroleum Exporting Countries, or OPEC.

Treasury yields continued to rise, signaling concerns that regardless of who wins the elections, the next administration might struggle with fiscal discipline. This sentiment was further exacerbated by the International Monetary Fund's warnings on the long-term trajectory of the U.S. national debt.

On the economic data front, U.S. factory orders declined by 0.5% from the previous month to $584.2 billion in September compared to a revised 0.8% fall in August.

Most sectors on the S&P 500 closed on a negative note, with utilities, communication services, and financials stocks recording the biggest losses on Monday.

However, energy and real estate stocks bucked the overall market trend, closing the session higher.

Index	Performance (+/-)	Value
Nasdaq Composite	-0.33%	18,179.98
S&P 500	-0.28%	5,712.62
Dow Jones	-0.61%	41,794.60
Russell 2000	0.40%	2,219.03

Insights From Analysts:

Ryan Detrick, chief market strategist at Carson Group, underscored that stocks perform well on election day, which could assuage investor concerns amid rising volatility.

"What really stands out is how well stocks have done after the 10 most recent elections. Higher a year later 9 times and up 15.2% on avg (median of 17.2%)," he said.

Here's how stocks have done after the past 24 elections.

What really stands out is how well stocks have done after the 10 most recent elections. Higher a year later 9 times and up 15.2% on avg (median of 17.2%). pic.twitter.com/ztim9o3RxP

— Ryan Detrick, CMT (@RyanDetrick) November 4, 2024

Echoing Detrick's sentiment, WisdomTree and Wharton School economist Jeremy Siegel said the equity bull run could continue.

"In the near term, stock markets seem poised for further gains, bolstered by resilient earnings and steady economic fundamentals, while bond markets will likely grapple with higher yields and volatility ahead," he said.

"The bull market in stocks looks set to continue, while bonds face a rougher road."

See Also: How To Trade Futures

Upcoming Economic Data

Tuesday's economic calendar is fairly light.

• On Tuesday, U.S. trade deficit data will be released at 8:30 a.m. ET.
• ISM services data will be released at 10 a.m. ET.
• API weekly crude oil stock data will be released at 4:30 p.m. ET.

Stocks In Focus:

• Trump Media & Technology Group Corp. DJT shares soared 5.6% on election eve.
• Palantir Technologies Inc. PLTR shares surged 13% in premarket trading after the company delivered strong performance and raised guidance.
• Boeing Co. BA shares rose nearly 2% after striking machinists ratified a new deal late Monday, ending a seven-week-long strike.
• NXP Semiconductors NV NXPI stock fell over 5% after the company's soft guidance, despite beating expectations in the September quarter.
• Investors are awaiting earnings results from Archer-Daniels-Midland Company ADM, Yum! Brands, Inc. YUM and Cummins Inc. CMI today.

Commodities, Bonds And Global Equity Markets:

Crude oil futures surged in the early New York session, rising by 0.4% after OPEC announced a delay in increasing production.

The 10-year Treasury note yield surged to 4.311%.

Major Asian markets ended in the green on Tuesday, and European stocks showed strength as well in early trading.

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Photo courtesy: Wikimedia