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U.S. equity futures are pointing higher with tech stocks leading the way Tuesday evening as the country awaits results of the 2020 elections.

  • Dow futures (YM=F): +46 points or 0.2%

  • S&P 500 futures (ES=F): +26 points or 0.8%

  • Nasdaq futures (NQ=F): +269.7 points or 2.4%

  • Russell 2000 futures (RTY=F): -5.6 points or 0.3%

It’s relatively early in the process, but the initial results show President Donald Trump may be closing in on former Vice President Joe Biden’s estimated lead. As of 11:50 p.m. ET, the Associated Press had tallied 120 electoral votes for Trump and 209 for Biden.

A candidate needs to gain at least 270 electoral votes to win the White House.

  • States called for Trump:  Ky., W. Va., S.C., Ala., Miss., Tenn., Okla., Ark., Ind., N.D., S.D., Wyo., La., Neb., Kan., Mo., Idaho, Utah

  • States called for Biden: Vt., Va., Conn., Del., Ill., Md., Mass., N.J., R.I., N.Y., N.M., D.C., Colo., N.H., Calif., Ore., Wash.

Early on AP projected Trump had a lead in Florida, one of a handful of battleground state Biden was thought to have a lead in. Other key states AP sees favoring Trump include Georgia and North Carolina.

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“It is still early on election night as East Coast polls have closed, but the race in Florida has made markets nervous that we may be in for a long night,” TD Securities Priya Misra said.

As for the tech-heavy Nasdaq outperforming, this may be traders increasing the odds we see more of what we saw in the previous four years: tech shares outperforming.

“US equities would experience a relief rally driven by the long-duration growth sectors which have underpinned the US market’s gains in the last four years,” Credit Suisse’s Andrew Garthwaite wrote about a potential Trump re-election scenario.

At about 10:15 p.m. ET, trading in Nasdaq futures were halted briefly after contracts surged 3.9%, triggering a circuit breaker.

“In typical election risk-driven fashion it’s been the stairs up and express elevator down as early results, especially out of Florida, are pointing away from the quick Biden outcome markets were looking for,” Axi strategist Stephen Innes said. “Markets have taken a step back from the Democratic sweep scenario.”

The market moves follow Tuesday’s surge, which saw the Dow (^DJI) rally 555 points, or 2%. That followed a 1.6% jump in the Dow on Monday as markets recovered much of last week’s sharp losses.

All eyes are on election results. In recent weeks, polling data have signaled Biden with an edge on Trump, whom for months has lagged in public surveys and predictive markets.

However, it’s unclear if there will be a winner declared in the near-term, especially with the Trump campaign saying it may contest the results should they point to a Biden victory. A contested election may already be priced into the market with at least some Wall Street experts considering it their baseline scenario.

© Yahoo Finance Yahoo Election Updates

Don’t make too much of the initial market reaction

It’s also unclear what investors should take away from election night futures activity.

Just four years ago when Donald Trump unexpectedly defeated Hillary Clinton, markets plunged that Tuesday evening with U.S. equity futures dropping 5% and hitting limit down, only to surge during Wednesday’s trading session. The S&P 500 gained 1.1% when it was all said and done.

And Wall Street’s forecasters haven’t forgotten about it.

“[T]he experience of 2016 suggests that investors should be careful about taking strong positions on political outcomes and, worse, mechanically translating those to market outcomes,” Capital Economics’ Neil Shearing wrote on Monday. “Back then, the consensus was that Trump was unlikely to win, but if he were to prevail then his rhetoric on trade and ‘carnage in America’ would spell disaster for equity markets. We all know what happened next.”

© Provided by Yahoo! Finance A jogger carries a Vote! flag as he passes a polling station, Tuesday, Nov. 3, 2020, in San Antonio. (AP Photo/Eric Gay)

There are a lot of things that could go wrong on election night and the days that follow. Again, a contested election has become a base-case scenario.

But the bottom line seems to be that investors should be cautious about betting too much on what they expect in the short-term.

“We recall dire predictions from many pundits and commentators about the stock market’s reaction to Mr. Trump’s surprise election victory in 2016,” Oppenheimer’s John Stoltzfus wrote in a note to clients.

“Our view is that such a reactive post-election downdraft would likely prove temporary and that after any ‘shock’ or ‘panic’ subsides, markets would again attempt to scale the proverbial ‘wall of worry’—seeking to grind higher on the strength of fundamental indicators such as jobs, income growth, monetary policy, and the next tranche of fiscal policy support, when it arrives.“

Sam Ro is managing editor at Yahoo Finance. Follow him on Twitter@SamRo

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