US stocks up as elections and a Fed decision loom

US stocks rose yesterday on the expectation the midterm election and a Federal Reserve decision would create a more business-friendly environment, though many traders forecast a selloff in the days ahead.

The S&P 500 index has risen almost 14 per cent since September on speculation of Republican congressional gains and measures by the Federal Reserve to stimulate the economy.

Most polls show Republicans regaining control of the House of Representatives, while President Barack Obama’s Democrats could be left with a narrow majority in the Senate. A divided Congress is typically seen as bullish for stocks as it makes passing new laws harder and lessens uncertainty for business. McCain said that if Republicans regain control there could be further stock gains.

The Dow Jones industrial average was up 64.10 points, or 0.58 per cent, at 11,188.72. The Standard & Poor’s 500 Index was up 9.19 points, or 0.78 per cent, at 1,193.57. The Nasdaq Composite Index was up 28.68 points, or 1.14 per cent, at 2,533.52.60