Election Day rally on Wall Street

NEW YORK (CNNMoney.com) -- Stocks rallied near midday Tuesday, with the Dow industrials touching a record trading high, as investors welcomed falling bond yields and lower oil prices and looked to the ongoing congressional elections.

The tech-fueled Nasdaq composite (up 20.11 to 2,386.06, Charts) jumped nearly 1 percent about 2-1/2 hours into the session. Should it close where it stood just before noon, the Nasdaq would be at its highest point since February 2001.

The Dow Jones industrial average (up 75.56 to 12,181.11, Charts) rallied 0.6 percent and touched a record trading high. Should the blue-chip barometer close where it stood just before noon, that would be a record closing high.

The broader S&P 500 (up 6.32 to 1,386.10, Charts) index added 0.5 percent, and was just short of touching a new six-year record.

Stocks rallied Monday, snapping back after a one-week selloff. The positive tone continued Tuesday as investors kept an eye on the elections.

Polls released earlier this week suggest the Democrats are likely to take control of the House from the Republicans. Whether the Republicans hang on to the Senate is unclear, with a number of races too close to call.

The likelihood of the Republicans losing at least one chamber of congress for the first time in more than a decade has been anticipated by investors, analysts say. As such, it is unlikely to have a big impact on the market.

"I think the general impression is that the election results won't sway things, so there is no concern that's distracting the market here," said Steven Goldman, market analyst at Weeden & Co.

As a result, he said, investors are free to focus on the positives that have fed the recent rally: strong corporate earnings, a belief the economy is headed for a "soft landing" and a Federal Reserve that's on hold for now - and possibly cutting rates later next year.

Should the Democrats take both chambers of Congress, that might upset traditionally Republican Wall Street in the short term. Alternately, should the Republicans keep both houses, that might initially spark a rally.

But longer term, stocks are likely to continue rising, Goldman said, noting the historical tendency for stocks, once they "get going" at this point in the year, to keep rallying through the end of the year.

Among blue chips, 28 out of 30 Dow components rose, led by Boeing (up $3.17 to $83.65, Charts), Intel (up $0.17 to $20.99, Charts) and Pfizer (up $0.20 to $27.19, Charts).

Elsewhere, chip stocks were especially strong, boosting the Philadelphia Semiconductor (up 11.52 to 468.61, Charts) index, or the SOX, 1.8 percent, with 18 of its 19 component's higher.

The biggest gainer was component Altera (up $1.10 to $19.54, Charts). Late Monday, the chipmaker reported third-quarter earnings and revenue that rose from a year ago and topped forecasts. The company also said that fourth-quarter sales would fall from the third quarter, but investors focused on the strong earnings.

Internet stocks also rallied, boosting the Goldman Sachs Hardware (Charts) index.

Toll Brothers warned that homebuilding revenue in its recently completed fiscal fourth quarter would fall more than expected and also said that a recovery for the much-maligned housing sector is not yet in sight. Toll Brothers (down $0.10 to $27.95, Charts) stock was little changed.

Nortel Networks (down $0.20 to $2.19, Charts) slumped 8 percent after the company reported a narrower quarterly loss that was nonetheless short of analysts' estimates on higher sales. The telecom gear maker also issued a mixed fourth-quarter outlook, sending shares lower.

Market breadth was positive. On the New York Stock Exchange, winners topped losers by two to one on volume of 710 million shares. On the Nasdaq, advancers topped decliners by nine to five on volume of just over 1 billion shares.

U.S. light crude oil for December delivery fell 22 cents to $59.80 a barrel on the New York Stock Exchange.

Treasury prices rose as investors bet that a change in control of the House would lead to more fiscal discipline in Washington, lowering the yield on the 10-year note to 4.64 percent from 4.70 late Monday. Bond prices and yields move in opposite directions.

COMEX gold rose 20 cents to $628.10 an ounce.

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