Wall Street gains on US election day as technology, chip stocks rise

Wall Street's main indexes rose on Tuesday as technology and chips stocks gained, while investors braced for volatile trading over the next few sessions as voting began in a tightly contested U.S. presidential election.

The final outcome could take days as opinion polls in the campaign's final days showed the contest between Republican Donald Trump and Democrat Kamala Harris was too close to call.

Track live updates on US polls here

The former president is the frontrunner, according to most betting market odds, which many investors have been following for any indication on the election outcome.

Markets remained calm on the voting day as VIX, an index of volatility, eased to 20.72, well below the levels seen during 2020 election and the two-month high it hit last week.

As treasury yields eased from recent highs, rate-sensitive megacap growth stocks gained with Meta Platforms adding 1.8% and Tesla rising 4%.

Upbeat forecasts from chipmaker GlobalFoundries lifted its shares 9%, while Nvidia rose 2.4% and an index of chip stocks jumped 1.3%.

In case an unsettled election result on Wednesday sparks investor anxiety, Ross Mayfield, an investment strategy analyst at Baird, recommended taking advantage of election-related market pullback.

"There's certainly a lot of anxiety about the election result, but (good) economic data, Fed cutting rates, earnings coming in pretty strong can overwhelm that anxiety," Mayfield said.

Investors are also keeping an eye on Congressional elections to determine the balance of power in Washington. Many analysts predict a split government, which would limit the ability of the President to enact significant policy changes.

Stocks viewed as bets on a win for the former president jumped, with Trump Media & Technology Group jumping 16%, while prison operator Geo Group gained 5.8%.

The Dow Jones Industrial Average rose 249.82 points, or 0.60%, to 42,044.42, the S&P 500 gained 45.37 points, or 0.79%, to 5,758.06 and the Nasdaq Composite gained 186.57 points, or 1.03%, to 18,366.55.

Palantir soared 21.2% to a record high after the data analytics firm raised its annual revenue forecast for the third time.

Shares of Boeing, which had risen before the bell following the end of a prolonged workers' strike, edged lower in volatile trading.

Meanwhile, U.S. services sector activity showed a surprise rise in October to a more than two-year high and employment strengthened, according to the Institute for Supply Management's non-manufacturing PMI index.

The Federal Reserve's November policy meeting will start on Wednesday. While markets are betting on a 25-basis point cut to interest rate, the outlook for future easing has grown uncertain as data points to a strong economy.

Advancing issues outnumbered decliners by a 2.64-to-1 ratio on the NYSE and by a 1.95-to-1 ratio on the Nasdaq.

The S&P 500 posted 10 new 52-week highs and six new lows while the Nasdaq Composite recorded 50 new highs and 62 new lows.