Wall Street stages Election Day rally

NEW YORK (AP) — Wall Street enjoyed an Election Day rally Tuesday, surging as investors brushed off weak economic data and looked forward to putting the uncertainty of the presidential voting behind them. The Dow Jones industrial average soared more than 300 points, and the other major indexes rose well over three percent.

It was the biggest Election Day rally ever for the Dow, which rose 305.45 points, or 3.28 percent, to 9,625.28. The Dow last closed above 9,500 on Oct. 6, when it finished at 9,955.50.

The broader indexes also rose. The Standard & Poor’s 500 index gained 39.45, or 4,08 percent, to 1,005.75.

The Nasdaq composite index rose 53.79, or 3.12 percent, to 1,780.12, its sixth straight advance and its longest winning streak.

The Commerce Department said factory orders fell 2.5 percent in September from August levels, much worse than the 0.7 percent drop analysts predicted. But investors generally expect data from September, and even October, to be extremely weak, as credit markets began to seize up in mid-September. Analysts believe much of the bad news is already factored into stock prices.

Matt King, chief investment officer of Oakland, California-based Bell Investment Advisors, said investors are moving into the market in anticipation of the economy improving.

“It’s pretty typical of how bear markets end,” King said. “The stock market recovers well ahead of the economy.”

Investors are also eager to have the election over with. Analysts predict stocks are headed for a recovery no matter who is elected, as the policies of both John McCain and Barack Obama will likely be guided by the weak economy and the recent flood of government support designed to keep the global financial system from collapsing.

Wall Street has had a better tone in recent sessions. Last week saw the Dow rise 11.3 percent - its best weekly gain in 34 years. Although many analysts predict the market will see more volatility as it recovers from devastating selling during much of October, many also believe that the worst of the losses are over.

“The risk of a depression is off the table,” said Ben Halliburton, chief investment officer of Tradition Capital Management. Stocks are discounting a normal to severe recession at this point, he said.

Investors’ demand for short-term government debt remained high, however, a sign that they are still cautious and willing to take a very small return on their investments in exchange for security. The yield on the three-month Treasury bill, seen as one of the safest assets around, rose only slightly to 0.50 percent from 0.47 percent Monday. A low yield indicates high demand.

The yield on the benchmark 10-year Treasury note fell to 3.88 percent from 3.92 percent late Monday.