The mood quickly changed as Trump snatched Florida and OH and ran much closer in other battleground states than polls predicted, only to then flip again in Europe as states, such as MI, and betting markets leaned back to favouring Biden.
The election was plunged into chaos early Wednesday as Trump prematurely declared victory and sought Supreme Court intervention to stop vote-counting - even as rival Joe Biden voiced confidence in his own chances.
The president won Ohio, Iowa, Texas and the key prize of Florida, while Mr. Biden flipped an electoral vote in Nebraska and won Arizona, the first time the state has gone to a Democratic presidential candidate since 1996. The Mexican peso recovered from a 2% tumble taken when the sudden chance of a Trump victory sparked nerves about USA trade policies continuing to favor tariffs.
The rally is "predicated somewhat on the hope that we're about to get closure on the election", said Briefing.com analyst Patrick O'Hare.
Still, the prospect of political uncertainty also sent investors to U.S. Treasuries, sparking the biggest one-day drop in 10- and 30-year bond yields since June. That set up a showdown in Pennsylvania, Michigan and Wisconsin, which, along with states such as Georgia and North Carolina, weren't yet called.
Analysts say Tuesday's rally reflected less of a bet on one candidate or the other, and more a hope that the United States can avoid a protracted fight and move past one of the key uncertainties in markets.
"What's emerging for me is that not much is going to change as a result of this election, even if Biden wins", said Peter Kraus, a former Goldman Sachs executive who founded asset management firm Aperture Investments in 2018.
Dow futures were down 0.1% after falling 1.5% following Trump's announcement. S&P 500 futures rose, fell and rose again before sitting on a gain of 1.2%, as of 7:27 a.m.
In European trading, Germany's DAX recovered from early losses, gaining 0.7%. Britain's FTSE 100 advanced 0.3% to 5,805.
Coronavirus in Pa.: More than 2,500 new cases reported as surge continues
None have been imposed yet, as the province reported 272 new cases of COVID-19 and another death the day before Halloween. The IDPH reported 402,401 people in IL have tested positive for COVID-19, while 9,711 people have died statewide.
Advancing issues outnumbered decliners by a 1.67-to-1 ratio on the NYSE and the Nasdaq.
Tokyo's Nikkei 225 rose 1.7% and the Hang Seng in Hong Kong declined 0.2%. After slumping to five-week lows last week, the S&P 500 and the Nasdaq began November on a strong footing as the consistent lead for Democratic presidential nominee Biden in national opinion polls raised hopes of a bigger stimulus package as well as more infrastructure spending post-election.
Investors worry that a contested election would mean it could be weeks before the victor of the White House is certain.
The CBOE volatility index, a gauge for short-term volatility, hit a two-week low after spiking to a four-month high in the run-up to the election.
History shows stocks tend to rise regardless of which party controls the White House. More than anything, what investors hope for from the election is a clear victor to emerge, even if it takes some time. "Gridlock is something markets like, because there won't be progressive changes on the right or the left".
Uncertainty is the enemy of markets.
While investors and economists have been clamoring for a renewal of stimulus after the expiration of an earlier round of support from Congress, many professional investors say what matters most is what happens with the pandemic.
Wall Street soared Wednesday amid an inconclusive presidential election, recording some of its biggest gains since April.
In other trading, benchmark US crude oil added 5 cents to $36.86 per barrel in electronic trading on the New York Mercantile Exchange.