(Reuters) – U.S. stocks rose on Tuesday, as strong earnings and easing of trade tensions lifted materials and industrial sectors, but trading volumes were light as uncertainty about the outcome of U.S. midterm elections kept investors on the sidelines.
Financial markets are bracing for President Donald Trump’s Republican party losing control of the House of Representatives, while retaining the Senate.
A political gridlock between the White House and Congress could hinder Trump’s pro-business agenda and raise concerns about political instability, but most analysts say this may not be the worst outcome for the stock market.
Many fear that there could be a sharp selloff in the market if the Democrats sweep both the House and the Senate. In contrast, stocks may rally on hopes of more tax cuts if Republicans retain control of the House.
“People are trying to figure out how to position for the mid-term election outcome here. The general view is that the outcome is predictable … the gridlock is somewhat positive and more predictive for markets going forward,” said Charlie Ripley, senior market strategist for Allianz Investment Management.
“If we see something that deviates, either a Democratic or a Republican sweep, we will see that play out tomorrow and through the rest of the week.”
Ten of the 11 major SP sectors were higher, led by a 1 percent gain in the materials index.
Shares of fertilizer company Mosaic Co (MOS.N) and lithium producer FMC Corp (FMC.N) rose 7 percent and 3.8 percent, respectively, on strong results.
Trade-sensitive industrial sector .SPLRCI rose 0.96 percent after Chinese Vice President Wang Qishan said Beijing was ready to hold discussions and work with the United States to resolve trade disputes.
At 11:58 a.m. EDT the Dow Jones Industrial Average .DJI was up 109.57 points, or 0.43 percent, at 25,571.27, the SP 500 .SPX was up 9.14 points, or 0.33 percent, at 2,747.45 and the Nasdaq Composite .IXIC was up 30.51 points, or 0.42 percent, at 7,359.36.
Among stocks, Mylan NV (MYL.O) jumped 15.5 percent after the drugmaker beat analysts’ estimates for third-quarter profit.
Pharmacy chain CVS Health Corp (CVS.N) was up about 4.6 percent after its quarterly profit beat analysts’ estimates on higher sales of prescription drugs and consumer health and beauty products.
Booking Holdings (BKNG.O) gained 4.4 percent after the online travel agency forecast a fourth-quarter profit above estimates.
Advancing issues outnumbered decliners by a 1.33-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 1.37-to-1 ratio on the Nasdaq.
The SP index recorded 16 new 52-week highs and 1 new lows, while the Nasdaq recorded 35 new highs and 48 new lows.
Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D’Silva