The S&P 500 rose on Monday as investors focused on Tuesday's midterm elections that will determine control of Congress, while shares of Meta Platforms jumped on a report of job cuts at the Facebook parent.
Republican candidates have picked up momentum in polls and analysts expect a split government, with the GOP winning the House of Representatives and possibly the Senate, as the likely outcome possibly hindering Democratic President Joe Biden's agenda.
"The likelihood that the Republicans take the House or the Senate is pretty high, therefore guaranteeing some form of gridlock over the next couple of years. That would probably take tax hikes off the table, and any sort of big spending potentially perceived as inflationary off the table," said Ross Mayfield, an investment strategy analyst at Baird.
Focus this week will also be on U.S. consumer prices data for October, due out on Thursday, for clues about how much the U.S. Federal Reserve's rapid interest rate hikes are helping cool down the economy.
Four Fed policymakers on Friday indicated they would consider a smaller rate hike at their next policy meeting, despite new data showing another month of robust job gains and only small signs of progress in lowering inflation.
Traders are divided about whether the Fed will raise interest rates by 50 basis points or 75 basis points at the U.S. central bank's meeting in December.
"All else equal, whether the terminal rate sits at 4.5%, 5% or beyond, monetary policy is poised to have a negative effect on the economy heading into 2023," Glenmede's investment strategists wrote in a note on Monday.
All the three major U.S. indexes have slumped this year, with the tech-heavy Nasdaq down 33% due to worries that aggressive monetary policy tightening could cripple the U.S. economy.
In afternoon trading, the S&P 500 was up 0.29% at 3,781.54 points.
The Nasdaq gained 0.03% to 10,478.70 points, while the Dow Jones Industrial Average was up 0.84% at 32,675.85 points.
Meta Platforms Inc jumped 4.6% following a report that the company was planning to begin large-scale layoffs this week. The stock has slumped more than 70% so far this year.
Weighing on the tech-heavy Nasdaq, Apple Inc fell about 1% after the company said it expected lower shipments of premium iPhone 14 models than previously anticipated.
Digital World Acquisition Corp surged 44% after former U.S. President Donald Trump hinted at another White House bid. The blank-check firm has agreed to take social-media startup Trump Media & Technology Group Corp public.
Walgreens Boots Alliance Inc gained 3.8%% after VillageMD, a primary care provider backed by the pharmacy chain, said it will acquire Summit Health in a deal valued at nearly $9 billion.
Of the 11 S&P 500 sector indexes, eight rose, led by energy , up 1.51%, followed by a 0.95% gain in communication services.
Advancing issues outnumbered falling ones within the S&P 500 by a 1.4-to-one ratio.
The S&P 500 posted 15 new highs and 15 new lows; the Nasdaq recorded 63 new highs and 180 new lows.
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