Bulls Cast Their Votes: Nasdaq Hits 2-Year High

FOX Business: The Power to Prosper

Stocks climbed sharply and the Nasdaq Composite set a new two-year high on Election Day as Wall Street cheered a tumbling U.S. dollar and bet its hopes for gridlock in D.C. and stimulus from the Fed will soon come true.

Today’s Markets

The Dow Jones Industrial Average rose 64.10 points, or 0.58%, to 11188.72, the Standard & Poor's 500 gained 9.19 points, 0.78%, to 1193.57, the Nasdaq Composite picked up 28.68 points, or 1.14%, to 2533.52. The FOX 50 jumped 6.32 points, or 0.74%, to 858.47.

Led by technology stocks, Wall Street displayed confidence ahead of the highly-anticipated midterm election results and a crucial Federal Reserve meeting likely to result in more help for the struggling economy.

Most of the credit for the solid rally can be given to the markets’ inverse relationship with the dollar, which fell sharply ahead of the Fed summit and in the wake of decent economic news in Europe.

“We’ve been in lockstep with the dollar today ever since the opening bell.,” Art Hogan, chief market strategist at Jefferies & Co.

The Nasdaq Composite set new 2010 highs landed at its best level since June 2008 amid strength for tech stocks like eBay (NASDAQ:EBAY) and Adobe Systems (NASDAQ:ADBE). The index has surged 99.7% since tumbling to a 6-year closing low of 1268.64 in March 2009.

If the Dow had been able to close above 11205, it would have been the highest territory for the benchmark index since September 2008, the month that Lehman Brothers imploded, exacerbating the financial crisis.

Still, most of the blue chips headed north, led by Home Depot (NYSE:HD) and American Express (NYSE:AXP). The index's worst performers were JPMorgan Chase (NYSE:JPM) and Intel (NASDAQ:INTC).

The Election Day gains come after a triple-digit rally fizzled on Monday, leaving the markets mostly unchanged.

Commodity-related and industrial stocks, which closely track the greenback, helped carry the markets higher on Tuesday. The groups benefited from a weaker U.S. dollar, which is viewed as a positive for dollar-traded commodities like crude oil and big exporters like manufacturing giant 3M (NYSE:MMM).

With the Fed meeting looming, the euro soared 0.94% to $1.4026 in response to upbeat manufacturing news out of Europe and further monetary tightening in Asia.

Boosted by the weaker dollar, crude oil closed at its highest level since May 3. Crude rose 95 cents a barrel, or 1.15%, to $83.90. Copper jumped 1.46% a pound to $3.8335. Gold gained $6.20 a troy ounce, or 0.46%, to $1,356.40.

Meanwhile, Wall Street continues to closely monitor events in Washington. For the past several weeks, the markets have cheered forecasts for a Republican tsunami that would hand them control of the House of Representatives and perhaps even the Senate.

The markets have been betting these outcomes will lead to gridlock in Washington, preventing big legislative initiatives that have spooked Wall Street. Stocks could receive a bounce if their wish is granted, or alternatively, slump if the GOP fails to live up to expectations.

At the same time, the Fed is widely expected to unleash a second round of quantitative easing to boost the economy on Wednesday. While the markets have rallied around hints that QE2 is in the cards, they have fretted in recent days over whether or not the size of the program will do enough to breathe life into the recovery.

“This is going to be one of the most watched Fed meeting results in quite some time,” said Hogan. “My guess is it will be difficult for the Fed decision to not mildly disappoint the markets.”

Corporate Movers

BP’s (NYSE:BP) third-quarter net income plunged 67% amid an additional $7.66 billion charge related to the Gulf of Mexico oil spill. However, the U.K. oil major’s operating profit of $5.53 billion jumped 18% and exceeded expectations by nearly $1 billion.

Archer Daniels Midland’s (NYSE:ADM) stock dropped 6.5% after the world’s largest corn processor shocked the Street with EPS of just 54 cents, compared with estimates for 75 cents. While its net profits slumped 30%, the company’s revenue of $16.8 billion solidly topped expectations.

MasterCard (NYSE:MA) wowed Wall Street with a third-quarter profit of $3.94 a share, well ahead of the Street’s view of $3.54. Revenue grew by 4.7% to $1.43 billion, narrowly topping estimates for $1.41 billion. MasterCard said its gross dollar volumes rose 8.5% in the third quarter to $685 billion.

Oracle (NASDAQ:ORCL) inked an all-cash $1 billion deal to scoop up ecommerce company Art Technology Group (NASDAQ:ARTG). The $6.00-per-share deal places a 46% premium on ATG’s Monday close. ATG competes with Amazon.com (NASDAQ:AMZN) and its customers include Best Buy (NYSE:BBY).

Clorox (NYSE:CLX) sank 4% after the cleaning products maker posted a non-GAAP profit of 98 cents a share, compared with forecasts for $1.14. Revenue slid 3% to $1.27 billion, trailing estimates for $1.38 billion.

Medco Health Solutions (NYSE:MHS) soared 10.8% after posting a stronger-than-expected 11% rise in third-quarter profits and non-GAAP EPS of 91 cents. Analysts had projected EPS of 88 cents. Medco also hiked its 2010 adjusted EPS view to $3.38 to $3.40, compared with estimates for $3.38, and said it sees 2011 EPS rising 12% to 17%.

Pfizer’s (NYSE:PFE) third-quarter net income tumbled 70% due to charges, but its non-GAAP profit of 54 cents a share topped estimates by 3 cents. Revenue climbed 39% to $16.17 billion, lagging behind the Street’s view of $16.68 billion. Despite disappointing sales of a pair of blockbuster drugs, Pfizer hiked its 2010 EPS view.

Kellogg (NYSE:K) weighed in with an in-line profit of 90 cents a share on sales of $3.16 billion. However, the world’s largest cereal maker issued a cautious guidance for 2011, weighing on its stock.

Global Markets

The U.K.'s FTSE 100 jumped 1.10% to 5757.43, Germany's DAX gained 0.75% to a new 52-week high of 6654.31 and France's CAC 40 rose 0.64% to 3865.72.

In Asia, Japan's Nikkei 225 inched up 0.06% to 9159.98, Hong Kong's Hang Seng advanced 0.08% to 23671.40 and China's Shanghai Composite lost 0.28% to 3045.43.