By Yashaswini Swamynathan and Tanya Agrawal
REUTERS - U.S. stocks staged a comeback on Tuesday as the most contentious election in the country's history entered its final leg, with the odds favoring Democrat nominee Hillary Clinton.
The former secretary of state is favored by investors as they see her lending greater clarity and stability to the markets, while Republican nominee Donald Trump's stance on foreign policy, trade and immigration is more uncertain.
Clinton has a 90 percent chance of defeating Trump, according to the final Reuters/Ipsos States of the Nation poll released on Monday.
Clinton was on track to win 303 votes in the Electoral College to Trump's 235, clearing the 270 needed for victory. She also leads Trump by about 44 percent to 39 percent, according to the poll.
The CBOE Volatility index, dubbed Wall Street's "fear gauge", reversed course to drop 4.5 percent, after having notched its biggest one-day drop since late June on Monday.
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"There is a general feeling that with the election ending, it reduces uncertainty for investors," said Rick Meckler president of investment firm LibertyView Capital Management.
"No matter who is elected, it will end a tremendous divide and return focus to earnings and all the fundamentals that have been pushed to the sidelines in recent weeks."
At 12:10 p.m. ET (1610 GMT), the Dow Jones Industrial Average was up 112.82 points, or 0.62 percent, at 18,372.42.
The S&P 500 was up 12.08 points, or 0.57 percent, at 2,143.6 and the Nasdaq Composite was up 33.60 points, or 0.65 percent, at 5,199.77.
Wall Street is also coming off its best day in more than eight months on Monday after the FBI said it would not press criminal charges against Clinton over her use of a private email server.
The iShares MSCI Mexico Capped ETF, known of late as the "Trump ETF", rose 2.25 percent. The ETF is viewed as a barometer of Trump's chances of winning the election since his policies are considered negative for Mexico.
"People are seeing a lack of major disruptors in the election process and that could be helping markets move higher, but volume is light today and it doesn't take much in order to move the prices," said Peter Jankovskis, co-chief investment officer at OakBrook Investments.
All the 11 major S&P 500 sectors were higher, led by gains in the defensive utilities and telecom services sectors.
Among stocks, CVS tumbled 13.6 percent to $72.05 and was the top drag on the S&P after the drugstore operator cut its full-year profit forecast. Walgreens fell 3.1 percent.
Hertz's more than 50 percent slump was set to be the stock's biggest ever after the car rental company slashed its full-year profit forecast.
Advancing issues outnumbered decliners on the NYSE by 1,704 to 1,122. On the Nasdaq, 1,509 issues rose and 1,085 fell.
The S&P 500 index showed 16 new 52-week highs and three new lows, while the Nasdaq recorded 42 new highs and 62 new lows.
(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Savio D'Souza)
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