Stocks Gain, Dollar Dips Ahead of Election Outcome

U.S. stocks capped their biggest two-day rally since September and Treasury yields rose on speculation that Congress will deliver a spending bill once the election is decided. The dollar weakened.

The S&P 500 climbed nearly 2%, led by a surge in bank shares. Asian futures pointed to a mixed start to trading Wednesday. Democratic nominee Joe Biden leads President Donald Trump in the final polls, with some investors speculating his victory would bring a surge in federal spending. Treasuries fell and a gauge of the dollar dropped the most in more than three weeks. Oil extended Mondays gains.

Meanwhile, Alibaba Group Holding Ltd.s U.S.-traded shares tumbled 8.1% after China halted the initial public offering of Ant Group Co., in which Alibaba owns about a one-third stake. The yuan pushed higher.

Investors are bracing for the outcome of a divisive election following weeks of speculation that a contested result could roil markets. Polls continue to indicate that Biden is ahead, though the race looks tight in some battleground states, some of which are seeing virus cases soar.

“It‘s a reflection of the market’s belief there is not going to be a whole lot of uncertainty after election day,” said Matt Stucky, portfolio manager for equities at Northwestern Mutual Wealth Management Co. “The worst outcome for election day is a really uncertain winner scenario where its going to take weeks and a lot of legal back and forth before the decision is ultimately made.”