S&P 500 climbs 1.49% to 7681.89 as stocks rally after US election results

The S&P 500 traded at 7681.89 at 11:40 a.m. New York time on Wednesday, November 4, up 112.97 points, or 1.49%, from the previous close of 7568.92. Stocks surged after Democrats won commanding victories in key races, a result one report said put political uncertainty to rest.

What happened

The index started Wednesday from a higher base than in the prior days. On Tuesday, Election Day, the S&P 500 closed at 7,568.92, which ended a three-day losing streak. Chip stocks helped drive that rebound.

The Nasdaq-100 rose 0.7% to 28,180.26 on Tuesday. It remains in correction territory, about 10% below its recent high.

Wednesday's move is much larger than Tuesday's gain. The S&P 500 is up 1.49% in a single morning, after a smaller rise on the previous session.

Why it matters

Two US data releases arrived during the morning. ADP Employment Change for October came in at 86K, against an estimate of 69K. The previous reading was also 86K.

The ISM Services PMI for October came in at 54.5, against an estimate of 54.8. The previous reading was 54.9, so the latest figure is slightly lower than last month's.

Taken together, the private payrolls figure and the services survey give a mixed picture of the US economy. ADP at 86K sits above its 69K estimate, while the ISM reading at 54.5 sits below its 54.8 estimate. The index rally, however, followed the election outcome, according to the reports describing the session.

The election result removed a source of uncertainty that had hung over the market in recent days. The S&P 500 had fallen for three straight sessions before Tuesday, and the size of Wednesday's gain shows how quickly the mood shifted once the races were decided.

For investors, the day shows how political events can move the broad market in a short time. The Nasdaq-100's position about 10% below its high also shows that the recent pullback in technology shares has not fully reversed.

What to watch next

The next test is whether the S&P 500 holds the gains it has built since the previous close of 7568.92. The Nasdaq-100 stays in correction territory after Tuesday's rise to 28,180.26, and chip stocks were part of that rebound.

Market participants will also follow how the policy outlook develops after the election results. Further US economic data will add to the picture drawn by today's ADP and ISM readings.