U.S. equities closed higher on Tuesday, led by utilities, as investors eagerly awaited the results of the U.S. presidential election.
"We're trying to regain what we lost," said Art Hogan, chief market strategist at Wunderlich Securities. "The concern [in the market] is we don't get a consensus outcome," where the Democrats keep the White House and take the Senate, while Republicans retain a majority in the House. "Any result outside of that ... is a negative for the market."
The Dow Jones industrial average rose more than 100 points before closing about 73 points higher with 3M, McDonald's Travelers contributing the most gains. The index also broke above its 50-day moving average and traded lower earlier in the session.
That said, Adam Sarhan, CEO of 50 Park Investments, remained slightly cautious on Tuesday "because there could still be a Brexit scenario. Nobody knows what the outcome [of the election] is going to be."
The S&P 500 gained 0.38 percent, as utilities gained around 0.7 percent, after briefly trading slightly lower. The index, which snapped its longest losing streak in almost 36 years on Monday, also briefly broke above its 50-day moving average for the first time since Oct. 10.
"I think people are starting to feel better about [the election]," said Robert Pavlik, chief market strategist at Boston Private Wealth. "I think people were looking for a reason to turn positive."
The Nasdaq composite also erased earlier losses, rising 0.53 percent.
"The action today suggests the incumbent party has a strong chance of winning," said Bruce Bittles, chief investment strategist at Baird.
Peter Cardillo, chief market economist at First Standard Financial, said that a surge in the Mexican peso may be improving sentiment in the U.S. stock market. The peso hit its highest level since Sept. 8 against the dollar and traded near 18.44. The Mexican peso has been considered a proxy trade for the U.S. election.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, fell about 5 percent to trade near 17.9, after briefly trading higher. Other perceived safety trades turned around Tuesday.
Gold futures for December delivery, which fell more than $20 on Monday, settled $4.90 lower at $1,274.50 per ounce. U.S. Treasurys erased earlier gains on Tuesday, with the two-year note yield near 0.86 percent and the benchmark 10-year yield around 1.86 percent.
Polls started opening in the East Coast around 6 a.m. Tuesday, as one of the most contentious elections in recent memory came to a close. Financial markets around the world had been pricing in a victory for Democratic nominee Hillary Clinton over her Republican counterpart, Donald Trump.
Clinton had seen her lead on Trump narrow recently, after the FBI opened a new probe related to emails found on disgraced congressman Anthony Weiner's computer. But on Sunday, FBI Director James Comey said the bureau had "not changed its conclusions," reached in July, on Clinton's private email server.
Financial markets rallied on the back of the news on Monday, with the three major U.S. indexes rising more than 2 percent and posting their best trading day since March 1.
Jeremy Klein, chief market strategist at FBN Securities, said in a note that "if the balance of power in Washington adheres to the status quo, then stocks could benefit from a classic Santa Claus rally."
"Thankfully after today we can stop speculating on what the stock market is going to do depending on who the next President is," Peter Boockvar, chief market analyst at The Lindsey Group, said in another note. "Now I don't want to downplay the importance of our next leader, ... but when it comes to the direction of the stock market in the next few years, it will be all about the direction of interest rates as that has been the predominant driver of this bull market."
The Federal Reserve is scheduled to meet mid-December, when it's expected to raise interest rates. Randy Frederick, vice president of trading and derivatives at Charles Schwab, said market expectations for a rate hike next month were at 82 percent, "which is the highest I've ever seen them."
But Charles Evans, the Chicago Fed president, said he would "feel better" about raising U.S. interest rates if he were more confident it would continue to rise. Inflation stuck below the goal is "one of the larger risks" facing the U.S. central bank, Evans said, adding it was critical to at least hit the target to convince the public that 2 percent is not a ceiling.
The economic calendar remains light on Tuesday, with the September job openings and labor turnover survey (JOLTs) showing job openings were little changed at 5.5 million, while hirings edged down to 5.1 million.
Overseas, European equities traded mostly higher, with the pan-European Stoxx 600 index gaining around 0.32 percent. In Asia, stocks mostly rose, with the Shanghai composite advancing 0.47 percent and the Nikkei 225 closing just below breakeven.
Latin American equity markets also traded mostly higher, with the iShares MSCI Mexico Capped ETF (EWW) and the iShares MSCI Brazil Capped ETF (EWZ) gaining 1.75 percent and 0.72 percent, respectively.
The gained 8.01 points, or 0.38 percent, to end at 2,139.53, with utilities leading 10 sectors higher and energy lagging.
The Nasdaq rose 27.32 points, or 0.53 percent, to 5,193.49.
About four stocks advanced for every three decliners at the New York Stock Exchange, with an exchange volume of 879.73 million and a composite volume of 3.847 billion at the close.
In oil markets, U.S. crude erased earlier losses, settling 0.2 percent higher at $44.98 per barrel.
— Reuters contributed to this report.
On tap this week:
U.S. Election Day
12:20 p.m. Chicago Fed's Evans
Earnings: Burberry, Viacom, Wendy's, Norwegian Cruise Lines, Dish Networks, Mylan Labs, SunLife Financial, Sunoco Logistics, Popeyes, Shake Shack, Silver Wheaton, The Container Store, Flowers Food, Atmos Energy, AmeriGas Partners
10:00 a.m. Wholesale trade
1:30 p.m. Minneapolis Fed President Neel Kashkari
9:00 p.m. San Francisco Fed President John Williams
8:30 a.m. Initial claims
9:00 a.m. St. Louis Fed President James Bullard
2:00 p.m. Federal budget
Bond market closed, stock market normal hours
Earnings: Allianz, JC Penney, Brookfield Asset Management
10:00 a.m. Consumer sentiment