Stocks rallied to mark a third-straight day of gains on Tuesday as investors looked ahead to the outcome of the U.S. midterm elections. The Dow Jones Industrial Average rose over 300 points, while the S&P 500 and Nasdaq Composite both climbed about 0.5% each.
Here's how the market settled on Tuesday:
S&P 500 Index (NYSE: SPY): +0.56% or +21.31 points to 3,828.11
Dow Jones Industrial Average (NYSE: DIA): +1.02% or +333.83 points to 33,160.83
Nasdaq Composite Index (NASDAQ: QQQ): +0.49% or +51.68 points to 10,616.20
Market participants were focused on Tuesday's midterm elections throughout the trading day, with many investors betting that Republicans will take back the House of Representatives and possibly win the Senate. Historically, investors prefer a split Congress or White House, which will limit government spending, new taxes and unfavorable legislation.
Separately, investors are anxiously anticipating the release of October's consumer price index (CPI) report due out Thursday, which will give more clarity on the Federal Reserve's monetary policy direction.
Some Wall Street banks are forecasting that the U.S. is headed towards a "hard landing" for the economy as the Fed continues its aggressive actions to stabilize prices. Last week, Fed Chair Jerome Powell warned that the path to achieving a desired "soft landing" has become less likely as inflation continues to soar in spite of the central bank's aggressive actions.
"The U.S. economic expansion already looked precarious. After one of the most rapid recalibrations of monetary policy in several decades, the full effect remain to be seen," Jonathan Pingle, managing director and chief U.S. economist at UBS, wrote in the bank's Global Economics & Markets Outlook 2023-2024 report.
"With meaningful imbalances remaining in the U.S. economy as a result of the pandmeic, we expect 2023 to bring an economic downturn, or correction. The good news, resolving the tensions we think sets the US economy up after 2023 for better years ahead," Pingle added.
Elsewhere, the crypto market experienced a broad sell-off on Tuesday after Binance and FTX--two of the largest cryptocurrency exchanges--came to a merger agreement to fix a liquidity crunch. Bitcoin hit its lowest level since November 2020.