Wall Street stocks jumped Wednesday as markets absorbed the latest developments in the still-unresolved US presidential contest and apparently shrugged off the risk of legal challenges by President Donald Trump.

File photo: AFP

The Dow Jones Industrial Average climbed 1.3 percent to finish at 27,847.66, rising for a third straight session.

The broad-based S&P 500 gained 2.2 percent to 3,443.44, while the tech-rich Nasdaq Composite Index advanced 3.9 percent to close at 11,590.78.

Analysts attributed the rally to the demise of a "blue wave" election outcome that would have seen a complete Democratic sweep of Washington, including a takeover of the Senate and a White House win by Joe Biden.

Biden is still well positioned to win the presidency, carrying leads in key states, but the Senate looks poised to remain in Republican hands.

That outcome will "moderate" policies from Washington, lessening the chances of major tax increases or overhauls to health care and other realms, said Shawn Cruz, senior market strategist at TD Ameritrade.

The market had "a little bit of a collective sigh of relief," Cruz said. 

Investors for now have shrugged off worries about a protracted legal battle after Trump wrongly claimed victory Tuesday night. The closely-watched CBOE Volatility Index -- which is seen as a proxy on fear -- fell sharply.

Markets did not move on headlines that Trump would file legal challenges to seek a recount in Wisconsin after that state was called for Biden, Cruz said.

After the close, Michigan too was put in Biden's column, making his path to the needed 270 electoral college votes more likely. The major indices gained further in after-hours trading.

The presidential race has overshadowed a fairly heavy release of economic data, including reports Thursday that showed weaker-than-expected private-sector hiring in October, and a softening of services sector activity.

The reports come ahead of the conclusion Thursday of the Federal Reserve's two-day policy meeting.

Analysts are watching to see if the US central bank will signal plans to do more to help support the economy which continues to struggle to recover amid a worsening coronavirus outbreak.

Shares of Uber Technologies shot up 14.6 percent and Lyft gained 11.3 percent after California voters backed a proposition that exempted ride-share rivals Uber and Lyft from a new state law requiring drivers to be treated as employees.