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Industrial and tech firms lead U.S. stocks higher

Industrial and tech firms lead U.S. stocks higher
The New York Stock Exchange. (Justin Lane / EPA-EFE/REX)

U.S. stocks rose Tuesday as industrial and technology companies recovered some of the big losses they took over the last month. Strong company earnings also contributed to the gains, but stocks stayed calm as traders waited for results from the midterm election.

Industrial and basic materials companies made some of the biggest gains following reports from fertilizer maker Mosaic and granite, limestone, sand and gravel seller Martin Marietta Materials. Bond prices slipped, sending yields up. Oil prices continued to fall, extending four weeks of losses.

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The midterm election will determine control of the House of Representatives and Senate, and 36 governorships are being contested along with other state and local positions. The vote could affect U.S. trade, economic and security policies.

Alicia Levine, chief market strategist at BNY Mellon Investment Management, said some of the most dramatic reactions to the elections might be seen in the healthcare sector. If Republicans keep control of the House and Senate, they could make another attempt to eliminate the 2010 Affordable Care Act.

“If the Democrats take the House, the Affordable Care Act is not under threat of being repealed,” which could help health insurers and hospitals, she said. “If we see the Democrats take the governors houses, you could also see the expansion of Medicaid.”

A Democratic House majority might work with the administration to try to reduce drug prices, and would take a more lenient approach on food stamp benefits. That could help big-box stores and grocery chains, which get a lot of revenue from those programs.

If Republicans keep control of the House, Levine said, they might index capital gains taxes to inflation, which would effectively cut those taxes. While that could boost the economy, it would also encourage the Federal Reserve to keep raising interest rates at a faster pace, and investors are already concerned that rates could rise too fast.

The Standard & Poor’s 500 index rose 17.14 points, or 0.6%, to 2,755.45. The Dow Jones industrial average climbed 173.31 points, or 0.7%, to 25,635.01. The Nasdaq composite rose 47.11 points, or 0.6%, to 7,375.96. The Russell 2000 index of smaller-company stocks rose 8.59 points, or 0.6%, to 1,556.10.

Stocks dropped in October and recovered a sliver of their gains during a three-day rally last week. They made smaller moves in the final few days before the polls closed. Stocks tend to fall before midterm elections and then rally once the voting is over. The S&P 500 has generated an average price return of 16.7% in the 12 months after midterm elections since 1946, according to research firm CFRA.

Drugstore and pharmacy benefits manager CVS Health rose 5.7% to $77.90 after it posted third-quarter results that beat Wall Street forecasts. It was helped by a large bump in prescriptions. CVS also said it expects to complete its purchase of health insurer Aetna before Thanksgiving.

Symantec jumped 12.6% to $22.54, rallying after the security software maker said it bought two smaller companies. It climbed further after Reuters reported that private equity firm Thoma Bravo is interested in buying the company.

Among materials companies, Mosaic climbed 10.6% to $35.64 after it raised its annual profit forecast, and Martin Marietta advanced 8.4% to $189.55. Construction materials firm Vulcan rose 3.5% to $104.12.

Industrial companies also rose. Caterpillar climbed 2.3% to $129.33. Boeing ticked up 1.2% to $366.47.

Oil prices continued to slip after the United States said it would let a group of allies keep buying oil from Iran as long as they continued to try to reduce their imports from that nation. The United States reinstated sanctions on Iran this month after withdrawing from an international agreement intended to curb Iran's nuclear program, and analysts feared that oil prices would jump as supplies tightened.

Benchmark U.S. crude oil fell 1.4% to $62.21 a barrel in New York. In early October it traded above $76 a barrel. Brent crude fell 1.4% to $72.13 a barrel in London.

Wholesale gasoline was little changed at $1.69 a gallon. Heating oil was little changed at $2.19 a gallon. Natural gas stayed at $3.56 per 1,000 cubic feet.

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Bond prices fell. The yield on the 10-year Treasury note rose to 3.22% from 3.19%.

Gold fell 0.5% to $1,226.30 an ounce. Silver fell 1% to $14.50 an ounce. Copper fell 0.9% to $2.73 a pound.

The dollar rose to 113.40 yen from 113.21 yen. The euro slipped to $1.1413 from $1.1418.

Britain's FTSE 100 fell 0.9% as the U.K. and European Union tried to resolve their differences over the Irish border. The two sides are trying to find a way to make sure there are no customs posts or other checks on the border between Ireland, an EU member, and Northern Ireland, which will leave the EU along with the rest of the U.K.

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