Rally continues: Stocks rise on Election Day

Coming off its biggest stock market rally in eight months, Wall Street added to the gains on Election Day as Americans hit voting booths and investors wait to see who will be the next president of the United States.

At the 4 p.m. ET close, the Nasdaq stood 0.5% higher on the day. The Dow closed up 73 points, a 0.4% climb. The S&P 500 also gained 0.4%.

Tuesday marked the Dow's best two-day gain since a 520-point jump on June 28-29. The S&P 500's two-day gain of 2.6% wipes out much of the 3.1% drop registered by its previous, nine-session losing streak.

Investors began the trading day cautiously but stocks pushed ahead at midday and jumped higher, a day after the Dow Jones industrial average closed up 371 points and the broad stock market snapped its longest losing streak in 36 years after FBI director James Comey said the agency is not recommending criminal charges against Democratic nominee Hillary Clinton over her emails. Investors interpreted the FBI decision as boosting Clinton's chance to win the tight election race with Republican challenger Donald Trump as well as clearing a legal hurdle for Clinton in the event that she does prevail on Election Day.

What the election means for your pocketbook

After Monday's big rally, which was clearly pricing in a Clinton win, Wall Street was debating whether the stock surge was the start of a a longer relief rally if Clinton wins, as the ex-secretary of State and First Lady is viewed as more of a status quo candidate. Or whether it was setting the market up for a vicious fall if Trump, viewed more negatively by Wall Street due to his unpredictability and negative views toward free trade, engineers a surprise win.

Says Ed Yardeni, chief investment strategist at Yardeni Research: "Yesterday’s happy day might be the beginning of yet another relief rally, which has been the modus operandi of the current bull market. That could happen if Hillary Clinton wins today."

Others argue that the big rally Monday could be unwound quickly and cause a sharp market downturn if Trump triumphs.

Warns Nigel Green, founder and CEO of financial advisory firm deVere Group: "Complacency and full assumptions must be avoided. This is particularly important because if Trump prevails, we can expect, in the immediate aftermath, a double whammy negative impact on the markets. This is because the likely sell-offs will be compounded by the markets having priced in a Clinton victory and were wrong. Plus the markets tend to have knee-jerk reactions to these kind of events.”

What to expect: How the election results could move markets

In general, Wall Street expects a modest rally for stocks if Clinton wins, as markets ran up sharply Monday on bets should would prevail. In contrast, if Trump wins, stocks could suffer a Brexit-like decline from anywhere from 9%, according to Barclays, to a drop of 10% to 12%, according to Jonathan Golub, chief U.S. market strategist at RBC Capital Markets.

If Trump prevails, so-called safe havens, such as gold, the Wall Street "fear gauge" known as the VIX, and the Japanese yen should rally.

If Clinton wins, stocks will rise, the fear gauge will decline, hospital, HMO and other stocks related to Obamacare will get a boost as will emerging market stocks, which will breathe a sign of relief that Trump's anti-free trade agenda won't impact them.

Minimum wage: 4 states decide whether to put more money in workers' pockets

In addition to watching to see who wins, Wall Street will also be focused later tonight on the post-Election reaction of both the winner and loser. Investors will gauge whether the winner moves to unite the country after a divisive campaign, and whether the loser accepts the defeat or opts to challenge the results, which would create a new cause of uncertainty for already edgy markets.

Ahead of the vote, the yield on the 10-year Treasury, which moves in the opposite direction of price, rose to 1.87% from 1.83% Monday. Gold was down $2.30 to $1,277.10 an ounce after tumbling more than $20 Monday.

Stock markets around the globe were trading cautiously. Hong Kong’s Hang Seng index rose 0.5% to 22,909.47 and mainland China's Shanghai composite index added 0.5% to finish at 3,147.89. Japan’s Nikkei 225 index lost 0.03% to close at 17,171.38.

In Europe, Germany's DAX index rose 0.3%,  France's CAC 40 gained 0.4% and Britain's FTSE 100 added 0.5%.

Contributing: Jayne Onyanga-Omara