Stock rally continues on Election Day as Dow up more than 100

Coming off its biggest stock market rally in eight months, Wall Street was adding to the gains on Election Day as Americans hit voting booths and investors wait to see who will be the next president of the United States.

Investors began the trading day cautiously but stocks pushed ahead at midday, a day after the Dow Jones industrial average closed up 371 points and the broad stock market snapped its longest losing streak in 36 years after FBI director James Comey said the agency is not recommending criminal charges against Democratic nominee Hillary Clinton over her emails. Investors interpreted the FBI decision as boosting Clinton's chance to win the tight election race with Republican challenger Donald Trump as well as clearing a legal hurdle for Clinton in the event that she does prevail on Election Day.

At 12:35 p.m. ET,  the Dow was up 110 points, or 0.6%, the Standard & Poor's 500 stock index gained 0.6% and the Nasdaq composite rose 0.7%.

After Monday's big rally, which was clearly pricing in a Clinton win, Wall Street was debating whether the stock surge was the start of a a longer relief rally if Clinton wins, as the ex-secretary of State and First Lady is viewed as more of a status quo candidate. Or whether it was setting the market up for a vicious fall if Trump, viewed more negatively by Wall Street due to his unpredictability and negative views toward free trade, engineers a surprise win.

Says Ed Yardeni, chief investment strategist at Yardeni Research: "Yesterday’s happy day might be the beginning of yet another relief rally, which has been the modus operandi of the current bull market. That could happen if Hillary Clinton wins today."

Others argue that the big rally Monday could be unwound quickly and cause a sharp market downturn if Trump triumphs.

Warns Nigel Green, founder and CEO of financial advisory firm deVere Group: "Complacency and full assumptions must be avoided. This is particularly important because if Trump prevails, we can expect, in the immediate aftermath, a double whammy negative impact on the markets. This is because the likely sell-offs will be compounded by the markets having priced in a Clinton victory and were wrong. Plus the markets tend to have knee-jerk reactions to these kind of events.”

In general, Wall Street expects a modest rally for stocks if Clinton wins, as markets ran up sharply Monday on bets should would prevail. In contrast, if Trump wins, stocks could suffer a Brexit-like decline from anywhere from 9%, according to Barclays, to a drop of 10% to 12%, according to Jonathan Golub, chief U.S. market strategist at RBC Capital Markets.

If Trump prevails, so-called safe havens, such as gold, the Wall Street "fear gauge" known as the VIX, and the Japanese yen should rally.

If Clinton wins, stocks will rise, the fear gauge will decline, hospital, HMO and other stocks related to Obamacare will get a boost as will emerging market stocks, which will breathe a sign of relief that Trump's anti-free trade agenda won't impact them.

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