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Wall Street jumps in record Election Day rally

(Agencies)
Updated: 2008-11-05 07:14

NEW YORK - US stocks rose in the biggest Election Day rally ever on Tuesday, as investors looked forward to the end of the uncertainty surrounding the long fight for the White House, and as energy companies' shares followed oil prices higher.

The rally pushed stocks to their highest close since October 6, with the S&P 500 crossing the 1,000 mark for the first time since October 13. The three major US stock indexes are all up around 18 percent from their closing low points on October 27.

Adding to the positive tone, the US Treasury Department is exploring how to best expand its capital injection program and is considering specialty finance firms, such as General Electric's GE Capital unit, a source familiar with the government's thinking said.  Shares of GE, an economic bellwether and a Dow component, rose more than 7 percent.

Chevron led the Dow higher after US crude futures jumped $6.62, or 10.4 percent, to settle at $70.53 a barrel on signals that OPEC members were cutting output to comply with the group's recent decision.

More signs of thawing credit markets prompted investors to snap up shares at multi-year lows. The interest rates banks charge each other for short-term loans fell again, providing further hope that measures to shore up the credit markets are taking hold.

But the presidential election was first and foremost on investors' minds. Opinion polls indicate Democrat Barack Obama is running ahead of Republican John McCain in enough states to give him more than the 270 electoral votes he needs to win.

"There is new leadership tomorrow and whoever it is, it has to be better than what we've got," said Jim Paulsen, chief investment officer of Wells Capital Management.

Also, with regard to the credit markets, "you've got that relief that they've got that plumbing unplugged and working again that should be a catalyst to go back into the equity market," Paulsen said.

The Dow Jones industrial average rose 305.45 points, or 3.28 percent, to 9,625.28. The Standard & Poor's 500 Index jumped 39.45 points, or 4.08 percent, to 1,005.75. The Nasdaq Composite Index gained 53.79 points, or 3.12 percent, to 1,780.12.

It was the biggest Election Day rally ever. Election Day was a market holiday before 1984, according to Standard & Poor's.

Strong earnings from MasterCard Inc and Archer Daniels Midland Co improved optimism about consumer spending and pricing power even as economic data pointed to a worsening slowdown.

MasterCard, the world's second-largest card network, surged 18.3 percent to $170.24 after the company reported stronger-than-expected earnings late on Monday.

Archer Daniels' shares jumped 15.3 percent to $24.33 after it posted a sharply higher profit, helped by higher selling prices and an accounting change.

GE climbed 7.6 percent to $20.77.

A possible next step for the Treasury could be extending help to specialty finance firms such as GE Capital, CIT Group and others, the source said. CIT's shares shot up 36.1 percent to $6.15 on the New York Stock Exchange.

Chevron shares rose 6.1 percent to $78.19, while an index of oil stocks gained 6.6 percent.

Tenet Healthcare Corp sank 36.7 percent to $2.61 on the NYSE after the hospital operator reported worse-than-expected results and cut its 2008 forecast.

In economic news, data showed that new orders received by US factories took a surprisingly steep tumble for a second month in a row during September, but the markets largely shrugged off the data.

At least 130 million Americans were expected to vote on a successor to unpopular Republican President George W. Bush and set the country's course for the next four years.

Trading was muted on the New York Stock Exchange, with about 1.31 billion shares changing hands, below last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 2.34 billion shares traded, above last year's daily average of 2.17 billion.

Advancing stocks outnumbered declining ones by a ratio of 4 to 1 on the NYSE and, on the Nasdaq, by about 9 to 5.