US stocks open slightly higher with the Dow up more than 150 points after plummeting in pre-trading as race for the White House hangs in the balance

Wall Street's main indexes opened slightly higher on Wednesday as the race for the White House went down to the wire, although investors remained worried about the prospect of a contested result.

The Dow Jones Industrial Average rose 154 points, or 0.56 percent, at the open to 27,634.41.

The S&P 500 opened higher by 37.30 points, or 1.11 percent, at 3,406.46, while the Nasdaq Composite gained 283.20 points, or 2.54 percent, to 11,443.78 at the opening bell.

It comes after Treasury yields and stock futures swung up, down and back again overnight as early results showed a race that's still too close to call between President Donald Trump and former Vice President Joe Biden. 

Investors see cause for optimism if either candidate wins, but much is at stake pending the results. They include prospects for a big stimulus effort for the economy, potential tax rate increases and tighter regulations on businesses that investors saw coming from a potential Democratic sweep of the elections, something that has so far failed to materialize. 

Much of Tuesday's strength for Wall Street was due to big gains for technology stocks. 

Investors have increasingly seen these stocks as some of the safer bets in the market, able to grow their profits even in a pandemic as more of daily life shifts online. They don't need a big stimulus effort for the economy as much as other companies, leading to the much better performance for the tech-heavy Nasdaq over other indexes. 

Other areas of the stock market, where profits are more dependent on the strength of the economy, weakened. 

Some of the market's sharpest moves overnight were in yields for US government bonds, which had earlier risen on expectations that a Democratic electoral sweep could open the door for big economic stimulus. 

The 10-year Treasury yield swung from 0.88% late Tuesday up to 0.94% as polls were closing. It then sank as odds for a Democratic takeover of the Senate diminished and after Trump made premature claims of victories in several key states. It sat at 0.76% shortly after trading opened on Wall Street. 

All the swings are a bit reminiscent of four years earlier, when Trump surprised the market by winning the White House. Markets initially tumbled after polls and the market´s expectations proved to be so wrong in 2016, but they quickly turned around on expectations that Trump´s pro-business stance would be good for corporate profits.

The difference this time is that the uncertainty seems set to linger. It may take days for a winner of the White House to emerge, and professional investors say they´re bracing for sharp market swings in the meantime. Trump said early Wednesday that he´d take the election to the Supreme Court, though it´s unclear exactly what he means by that as states continue to tally all their votes.

'Both candidates at this stage often claim victory, but it´s rare that we see an invocation of the court system at this point, and we expect quite a lot of market volatility,' Rick Lacaille, global chief investment officer at State Street Global Advisors, said in a statement.

A contested election was a worst-case scenario for markets because it would only prolong the uncertainty that´s been keeping investors on edge.

'Basically, we are seeing a nightmare situation come true because now we are talking about legal battles,' said Naeem Aslam, analyst at Avatrade.com.

The large number of Americans who voted early means the result of this presidential election might not be known for days.

'The market hates uncertainty and if we have continued uncertainty, then we´re going to see prices fall, we´re going to see volatility remaining high,' said Kiran Ganesh, analyst at UBS bank.

US futures rose and Asia markets posted gains as investors worldwide await the results from the presidential election. Pictured: Currency traders watch monitors at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea

In the end, though, many fund managers suggest investors hold steady through the tumult in large part because one person can´t singlehandedly move the economy and stocks tend to rise regardless of which party controls the White House.

While a Trump win may lessen the odds of a big stimulus package for the economy - something that investors have been clamoring for - it would also likely mean four more years of low tax rates and lighter regulation on businesses. What happens with the coronavirus pandemic will have a much greater effect on markets than this election´s results, many fund managers say. 

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.

'With Donald Trump already claiming victory even though millions of votes are still uncounted, investors may have to belt up and brace themselves for some volatile sessions of trading ahead,' noted Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. 

'The US election has become a mess,' said Naeem Aslam, chief market analyst at Avatrade.

'Basically, we are seeing a nightmare situation come true because now we are talking about legal battles. This uncertainty is going to keep traders on edge.'

Aslam added that investors still saw the dollar as a safe bet amid the volatility on stock markets.

Before Wednesday's shock turn of events, world equities had rallied this week as traders piled bets on Biden winning, with opinion polls showing him with a big national lead though with slim advantages in battleground states. 

While Tuesday was formally Election Day, in reality, Americans have been voting for weeks. The Covid-19 pandemic caused a huge expansion in mail-in and early voting, and nearly 100 million people had already cast their ballots.

While a failure for Biden and the Democrats would jolt markets, the general consensus is that whoever wins will still push through a major stimulus package for the struggling US economy as it battles the virus.