(Reuters) – U.S. stock futures slipped late on Tuesday as investors awaited the results of U.S. midterm congressional elections, with Wall Street hoping for relief following a recent selloff.
In line with opinion polls, Wall Street had been expecting that President Donald Trump’s Republican party would lose control of the House of Representatives while retaining the Senate, setting up gridlock in Washington.
Earlier in the day, stock market indexes closed higher, helped by gains in CVS Health Corp (CVS.N) and Mylan NV (MYL.O) after they reported upbeat quarterly earnings, but trading volume was thin as investors held back on making big bets ahead of the vote count.
Kristina Hooper, chief global market strategist at Invesco in New York, said Tuesday’s market gains suggest investors have already priced in expectations the Democrats will take control of the House and put a brake on the potential for a new round of tax cuts.
“It seems investors have come to terms with the likelihood of a split Congress,” she said.
S&P 500 e-mini futures EScv1 were down 0.12 percent at 7:26 pm ET (0026 GMT).
In Tuesday’s trading session, the Dow Jones Industrial Average .DJI rose 0.68 percent to end at 25,635.01 points, while the S&P 500 .SPX gained 0.63 percent to 2,755.45.
The Nasdaq Composite .IXIC added 0.64 percent to 7,375.96.
About 6.85 billion shares changed hands on U.S. exchanges compared with the 8.7 billion average for the full session over the last 20 trading days.
Following a steep selloff in October, the S&P 500 remains down more than 5 percent from its record high, with investors worried a decade-old bull market may be ending.
Some investors said they would expect a drop, at least in the near term, if the Democrats gain control of both the House and the Senate. In contrast, stocks may rally on hopes of more tax cuts if Republicans retain control of the House.
Sweeping corporate tax cuts passed by the Republicans last year have supercharged earnings growth in recent quarters.
Other investors said the elimination of election uncertainty could create a boost either way.
“Once we get through the midterms, stocks usually go up, whatever the result, and you have to be a buyer,” said Jason Ware, chief investment officer at Albion Financial in Utah.
All of the S&P’s 11 major sectors showed gains, led by a 1.5 percent rise in the materials index .SPLRCM, which was helped by earnings reports.
The trade-sensitive industrial sector .SPLRCI closed up 1.1 percent after Chinese Vice President Wang Qishan said Beijing was ready to hold discussions and work with the United States to resolve trade disputes.
Healthcare stocks .SPXHC got a boost from Mylan (MYL.O), which jumped 16 percent after the generic drugmaker reported a bigger-than-expected quarterly profit as it sold more products in emerging markets.
Pharmacy chain CVS Health Corp (CVS.N) rose 5.7 percent after its results.
The health sector could be under the spotlight after the election as Trump’s efforts to lower prescription drug prices could get more attention should Democrats gain control in Congress.
Additional reporting by Sinead Carew, April Joyner in New York and Sruthi Shankar in Bengaluru; Editing by James Dalgleish and Diane Craft