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Inventory futures rose barely after Tuesday's rally as merchants await US election outcomes

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Election officials count postal ballots at a polling station in the Beloit City Fire Station on November 3, 2020 near Beloit, Wisconsin.

Scott Olson | Getty Images

Stock futures rose slightly on Tuesday evening after a strong rally during regular trading as investors waited for the result of the presidential election.

Dow Jones Industrial Average was trading 131 points higher, or 0.5%. S&P 500 futures rose 0.4% and Nasdaq 100 futures rose 0.3%.

Earlier in the day, the Dow popped more than 500 points, or 2.1%. The S&P 500 was up 1.8% and the Nasdaq Composite was up 1.9%. These gains contributed to Monday's strong performance.

This week's market moves come as investors hoped a late or controversial US presidential election result is avoided and a clear winner emerges Tuesday night.

"This recent price hike appears to be a 'rally of clarity' as investors look forward to finally clearing the excess of election uncertainty," Vital Knowledge founder Adam Crisafulli wrote in a note Tuesday.

Former Vice President Joe Biden had a national lead of 10 points over President Donald Trump, according to a poll published by NBC News / Wall Street Journal on Sunday. Wall Street is also watching some major Senate races that could result in Democrats taking control of Congress.

Investors are betting that a so-called blue wave – a scenario in which Democrats win the White House, get a Senate majority, and retain control of the house – could ease new fiscal stimulus passes if the economy drifts further out of the coronavirus pandemic recovered.

"I think no matter who wins, you have a quick dip and have to buy," CNBC's Jim Cramer said earlier Tuesday.

According to Baird, the S&P 500 lost an average of 0.4% the day after the presidential election.

Chao Ma of the Wells Fargo Investment Institute believes investors with a longer time horizon shouldn't worry too much about the impact of the election on the broader market.

"The history of the economy and the S&P 500 Index suggest that a president's party affiliation made little difference in terms of long-term returns," said the company's global portfolio and investment strategist. "The long-term drivers of the S&P 500 index have been economic and business gains, and we expect that will continue after the 2020 elections."

A year after the presidential election, the S&P 500 achieved an average return of more than 8%, according to Baird in 1960.

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Steven Gregory