New York: US stock futures jumped late on Tuesday as President Donald Trump appeared to be doing better than expected in some key states as early results in the US presidential election revealed a very tight race.
S&P emini futures were last up 1.3%, extending a rally during the official trading session in which the S&P 500 delivered its strongest one-day gain in almost a month.
Nasdaq 100 emini futures jumped 3%, with some investors pointing to a lower threat of antitrust scrutiny for major technology companies under Trump than under a Biden presidency.
Trump leads in swing states
Trump was narrowly leading Biden in Florida, while other competitive swing states that will help decide the election outcome, such as Georgia and North Carolina, remained up in the air.
Longer-dated U.S. Treasury yields retreated from five-month highs and Mexico's peso weakened sharply.
On betting website Smarkets, odds reflected a 68% chance of Trump winning, up from 33% earlier in the day.
"Trump is just doing better on the margin everywhere, and there have not been any big Biden upsets," said Bob Shea, Chief Executive Officer at TrimTabs Asset Management in New York.
"What we are seeing now is Trump doing better and people are just defaulting to 'Trump is good for the market', so why not just buy now and cut to the chase." Investors for months have said they favor a definitive, fast resolution to the election, rather than a drawn out process that many have feared. Quickly settling the election would clear the way for a deal on a stimulus package to help the damaged U.S.economy.
Early results also suggested the Democrats were less likely than previously expected to take the Senate from Republicans in a so-called blue wave.
"The best case is going to be a gridlock either for a Biden or Trump presidency. I think the market is repricing its assumptions," said Thomas Hayes, Chairman of Great Hill Capital in New York.
Some analysts said the market's strong gains earlier in the day also reflected a rebound from a selloff last week, the biggest weekly percentage decline for the S&P 500 in over seven months.
On election night 2016, U.S. stock index futures plunged as Trump pulled off an upset victory against Democrat Hillary Clinton. However, the next day marked the start of the so-called "Trump rally" that saw the S&P 500 jump 5% in a month, fueled by promises of massive tax cuts and financial deregulation.
In Tuesday's trading session, the Dow Jones Industrial Average rose 2.06% to end at 27,480.03 points, while the S&P 500 gained 1.78% to 3,369.02.
The Nasdaq Composite climbed 1.85% to 11,160.57.
The CBOE Volatility index, Wall Street's fear gauge, touched a one-week low after hitting a 4-1/2-month high last week.