Stocks staged a political relief rally Monday, surging globally on renewed expectations of a Hillary Clinton victory on Tuesday, after the FBI put to rest its latest probe of her e-mails with no new findings.
The major stock indexes climbed more than 2 percent, erasing a long slide that began Oct. 28, when the FBI’s director, James Comey, took the unusual step of alerting Congress to his e-mail inquiry, just 11 days ahead of a national election.
“We’ve round-tripped the Comey sell-off,” said John Canally, chief economic strategist at LPL Financial Holdings, a Boston brokerage firm. “Today’s really just getting us back to where we were” 12 days ago.
The Standard & Poor’s 500 index rose 2.2 percent to 2,131.52, while the blue chip Dow Jones industrial average added 371 points, or 2.1 percent, to close at 18,259.60. The tech-heavy Nasdaq index gained 2.4 percent to 5,166.17, and crude oil rallied.
Meanwhile, the safe havens of gold and US Treasuries fell slightly.
A key volality index known as the VIX lost 17 percent, but remained elevated, compared with recent months.
Market analysts said stocks could move higher by another 2 percent to 5 percent if Clinton prevails. But on the eve of Election Day, there was still plenty of uncertainty around the possibility of a Donald Trump win, as well as the makeup of Congress.
“We continue to expect Clinton to win the White House, with a slim Democratic majority in the Senate and a somewhat smaller Republican majority in the House,” Goldman Sachs reported Monday in a research paper.
Todd Millay, managing director of Choate Investment Advisors in Boston, said he thought the markets overreacted to the Comey review. He said that Choate has been managing money on the assumption the “status quo” will continue, meaning a Clinton win and a divided Congress.
“The control of the Senate is very much up for grabs,’’ Millay said.
More broadly, Millay said, “voters are reacting against globalization, against immigration.”
But in his opinion, such opposition can be bad for free trade and for the global economy. “Trump is just one embodiment of a global sentiment that you see in different guises around the world,’’ he said.
Monday’s optimism helped stop a nine-day decline in the S&P 500, its longest slump since 1980.
But some investors were girding for darker days ahead, including a scenario in which a defeated Donald Trump fans the flames of partisan anger by refusing to graciously accept the outcome of the election.
“There’s still uncertainy in [the] election, and, more importantly, how the end of the election is resolved,’’ said Andrew Lo, a finance professor at the Massachusetts Institute of Technology. “We’ll, hopefully, have a smooth transition of power. But there are other ways that it could go.”
It’s an unprecedented worry in modern times for the country’s political system, and one that’s gripped the entire world.
The questions swirling Monday for some investors were not simply about how stocks and bonds and gold and currencies would fare under the policies of the next president, but also about whether there would be violence — or even a final resolution of the voting.
“That’s a lot of ifs,’’ Lo said. “I could easily see a scenario where, if he does contest the election, if there are riots, that could cause the market to drop by 5 or 10 percent.”Beth Healy can be reached at firstname.lastname@example.org. Follow her on Twitter @HealyBeth.