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The Dow and S&P 500 closed higher on Monday, with the Nasdaq and TSX posting slimmer gains, on the eve of the U.S. presidential election, as investors girded for what could be big market swings this week. Cannabis stocks were among the biggest gainers in Canada.

Last week all three U.S. indexes, as well as the TSX, notched their biggest weekly decline since March, and this week market participants largely expected short-term volatility and the likelihood of major long-term policy shifts related to taxes, government spending, trade and regulation. The longer-term moves will depend on whether Republican President Donald Trump or his Democratic challenger Joe Biden wins the White House race.

Biden is ahead in national opinion polls, but races are tight in battleground states that could tip the election to Trump. Analysts said the outcome most likely to shake equity markets in the near term would be no immediate winner on Tuesday night.

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The S&P/TSX Composite Index was up 116.23 points, or 0.75%, at 15,696.87. Industrials and energy sectors led the advance, rising 2.24% and 2.23%, respectively.

U.S. West Texas Intermediate crude ended $1.02, or 2.9%, higher at US$36.81 a barrel. Oil, which sold off heavily last week in the face of rising COVID-19 cases worldwide and fears of deteriorating demand, rebounded thanks in part to strong factory data in Asia and the United States. U.S. manufacturing activity accelerated more than expected in October, with new orders jumping to their highest level in nearly 17 years.

Shares in cannabis companies, which some have speculated could benefit from a Biden win, rose sharply. Aurora Cannabis gained 16.17%, Cronos Group 12.16%, Aphria 11.02%, and Canopy Growth 10.79%. Elsewhere, Dorel Industries gained 4.59%, after its founders made a non-binding proposal to take the bicycle and-baby-products maker private.

While the Dow and S&P 500 were on the plus side, they ended well off session highs, and the Nasdaq dipped for awhile into the red as mega-cap technology and tech-related names struggled to gain traction after slumping in the prior week.

Growth stocks rose 0.54%, but were soundly outperformed by beaten-down value names, which tend to provide better returns coming out of a recession. The Russell 100 value index jumped 1.92% to notch its biggest daily percentage gain in nearly five months.

“It is hard to say whether this is sector rotation, an institutional driven event today or traders speculating on what might happen tomorrow,” said Peter Giacchi, Head of DMM Floor Trading at Citadel Securities in New York.

“The longer this plays out over the course of the week, if it takes that long, the more volatility we could expect.”

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The Dow Jones Industrial Average rose 423.45 points, or 1.6%, to 26,925.05, the S&P 500 gained 40.28 points, or 1.23%, to 3,310.24 and the Nasdaq Composite added 46.02 points, or 0.42%, to 10,957.61.

Investors betting on a Biden administration, which is expected to deliver a massive fiscal stimulus and promote green energy, have fueled a rally in solar stocks, industrials and small-cap names in recent weeks.

On the other hand, JP Morgan has listed Bank of America , Wells Fargo and Citigroup in its “Trump basket” of stocks. The S&P banks index added 2.27%.

Energy, materials and industrials enjoyed the sharpest percentage gains among major S&P 500 sectors, climbing more than 2.7%.

The S&P 500 ended a turbulent week at near six-week lows on Friday, after quarterly reports from technology mega-caps failed to impress and as coronavirus cases surged in the United States and Europe. The weekly percentage drop was the largest since late March, which marked the end of a selloff that sent the benchmark index into a bear market, or drop of more than 20% from a high.

The CBOE volatility index, known as Wall Street’s fear gauge, inched lower after ratcheting up last week to the highest in nearly four months.

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Investors will also watch this week’s Federal Reserve two-day policy meeting, the monthly jobs report and earnings from about a quarter of the S&P 500 companies.

Clorox Co shares jumped 4.24% after reporting its strongest quarterly sales growth in more than two decades and raising its full-year revenue forecast.

Market research firm Nielsen Holdings Plc rose 3.85% on plans to sell its consumer goods data unit for $2.7 billion to private equity firm Advent International.

But the S&P airlines index fell 1.44% while cruise operators Carnival Corp, down 1.17% and Norwegian Cruise Line Holdings Ltd, off 2.77% also lost ground, reflecting fears over a relentless surge in COVID-19 cases.

Advancing issues outnumbered declining ones on the NYSE by a 2.94-to-1 ratio; on Nasdaq, a 2.04-to-1 ratio favored advancers.

The S&P 500 posted 7 new 52-week highs and no new lows; the Nasdaq Composite recorded 21 new highs and 55 new lows.

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Volume on U.S. exchanges was 9.01 billion shares, compared with the 9.1 billion average for the full session over the last 20 trading days.

Reuters, with files from Darcy Keith of the Globe and Mail

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