For the past two weeks, stocks have been trading in a fairly narrow range as investors awaited the nation's election results.
"If we are lucky, we will know the winner by the end of the day because the worst-case scenario for the financial markets would be a stalemate that prolongs the process and involves the counting of thousands of absentee or provisional ballots," said Kathy Lien, Managing Director of FX Strategy. "Investors hate uncertainty and anything short of a clear victory will probably lead to weakness."
The outcome will set the tone for the debate over how to address the so-called "fiscal cliff" of tax hikes and spending cuts that goes into effect in January unless Congress acts. If lawmakers fail to address the fiscal cliff, they risk throwing the U.S. economy back into a recession.
While the latest national polls show that President Obama and Republican opponent Mitt Romney are neck-and-neck, the former Massachusetts governor is an overwhelming favorite of Wall Street, according to a CNNMoney survey of investment strategists and money managers.
Those who back Romney say that the country needs new leadership and new policies to address the fiscal cliff. They also say the candidate's promises to ease up on regulation and slash tax rates will benefit Corporate America.
Meanwhile, those who are supporting another four years for the Obama administration argue that a Romney victory would bring more uncertainty about whether the Federal Reserve's loose monetary policies, which have been credited for boosting the market during the past three years, would continue. Romney has been highly critical of Fed chairman Ben Bernanke.
In corporate news, Fossil(FOSL) posted quarterly earnings that beat forecasts, but revenue fell short of estimates, sending shares of the accessories maker significantly lower.
Zillow(Z) shares dropped sharply after the real estate website delivered a weaker-than-expected revenue outlook for the rest of the year.
AOL(AOL) shares soared more than 20% after the company delivered strong earnings and revenue results, as advertising sales climbed 7% during the quarter.
Office Depot(ODP) swung to a loss in the third quarter, as the company's sales fell 5%. But excluding certain charges, the office supply chain beat earnings expectations, sending shares 19% higher.
Shares of Express Scripts(ESRX) sank after the healthcare management firm said analysts' estimates for its 2013 earnings were "overly aggressive."
DirecTV(DTV) shares edged lower after the company lost more subscribers than expected during the third quarter, and missed earnings estimates. The satellite TV provider was hurt earlier this year by its dispute with Viacom(VIA), which blacked out channels including Comedy Central, MTV and Nickelodeon for 20 million DirecTV customers.
Shares of News Corp.(NWSA) moved up in after-hours trading following the media company's release of its first quarter results after the bell. News Corp's results beat analysts' forecasts on profits but slightly missed revenues projections.
Across the Atlantic, Greek lawmakers are expected to vote this week on reforms aimed at securing much-needed financial support, and the European Central Bank meets Thursday for its monthly policy discussion.