Stocks Burst With Election Relief; VIX Falls
Stocks popped like a champagne cork Tuesday as Wall Street breathed a gigantic sigh of relief that the presidential election — and the uncertainty that comes with it — is almost over.
Major averages ended near their session highs as steady gains throughout the day gave way and stocks rocketed to the finish line. The Dow Jones Industrial Averagerose 305.45, or 3.3 percent, to close at 9625.28. It was the Dow's highest close since Oct. 6 and its biggest election-day rally since Ronald Reagan defeated Walter Mondale in 1984.
The Standard & Poor's 500 indexshot up 4.1 percent, closing above 1,000 for the first time in three weeks. The Nasdaqadded 3.1 percent.
Stocks rallied around the world, helped by relief that the U.S. election is almost over, and as Australia cut a key interest rate by three-quarters of a percentage point, more than expected, boosting hope that more aggressive moves are being taken to stem the global economic slowdown.
The CBOE volatility index , widely considered to be the best gauge of fear in the market, dropped below 50as this major source of anxiety in the market, the presidential election, is about to be lifted. The VIX has been cut roughly in half since soaring to a record 89.53 in October.
Streams of voters hit the polls early as the historic race between Democrat Barack Obama and Republican John McCain has invigorated the voting public in ways this nation hasn't seen in years. The market has largely priced in an Obama win, spurring talk of an "Obama bounce" on the floor and alternative energy stocks surged.
"It's a sense of absolute reliefthat some definition today will arrive," said Diane de Vries Ashley, managing partner of Zenith Capital Partners in Coral Gables, Fla. "People are expressing 'enough is enough' and things are not as bleak as they appear to have been and now we can get down to business."
In addition to relief over the election, the market received some soothing comments from Vanguard Group founder John Bogle. The fundamentals of the market have "improved radically," Bogle told Reuters, which is something, he says, that investors may have overlooked in recent trading.
In the financial sector, MasterCard shares spiked more than 18 percent after the the credit-card provider delivered earnings that beat forecasts. Competitor Visa's shares came along for the ride, rising 14 percent.
Caterpillar led the Dow, followed closely by CNBC.com parent General Electric, as all but one of the 30 stocks in the blue-chip average finished positive.
GE got a boost from a Wall Street Journal report indicating that the Treasury Department is considering using more of its $700 billion rescue package to buy stakes in a wide range of financial companies, such as GE's GE Capital unit.
Hewlett-Packard was the lone decliner on the Dow, falling 1 percent after Baird slashed its earnings forecast for the hardware and software maker, citing challenging conditions for the tech sector.
U.S. stocks had little reaction to a report showing factory orders fell 2.5 percent in September, more than the 1.9-percent drop expected.
Dell shares ticked higher following news that the computer maker, which is near the end of its 9,000 job cuts, has asked employees to consider taking up to five days of unpaid vacation and offered voluntary severance packages.
Elsewhere in tech land, Google and Yahoohaven't given up on an ad-sales deal, submitting a revised deal proposal to the Justice Department. Google rose 5.9 percent, while Yahoo gained 4.7 percent.
American depositary shares of Swiss bank UBS rose 7.5 percent after the bank confirmed its third-quarter profit outlook but warned that the fourth quarter would be difficult and 3,000 jobs likely would be cut.
The market also was reacting positively to continued loosening of credit, as bank lending rates again fell. The London Interbank Offering Rate, or Libor, or Libor, fell to 0.38 on the overnight rate and 2.7 percent for 3-month lending.
Shares of agricultural giant Archer Daniels Midland soared 15 percent after the company reported sharply higher quarterly profit that was helped by higher selling prices and an accounting change.
Health-care company Cigna was among the big drags on the S&P 500, falling 6.1 percent, after a downgrade Monday by Moody's.
TUESDAY: Election Day; Dallas Fed president speaks
WEDNESDAY: Weekly mortgage applications; ADP employment report; ISM services report; weekly crude inventories; Earnings from Time Warner, Cisco and News Corp
THURSDAY: Monthly chain-store sales; weekly jobless claims; BOE, ECB announcements; Earnings from Anheuser-Busch
FRIDAY: Jobs report; pending-home sales; wholesale trade; consumer credit; Earnings from Ford, Sprint Nextel and Berkshire Hathaway
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