The financial world is looking hopefully ahead to a new president who will confront an economy beset by a stubborn housing slump and the worst financial crisis in 70 years, which has caused consumers and businesses to sharply reduce their spending.

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The financial world is looking hopefully ahead to a new president who will confront an economy beset by a stubborn housing slump and the worst financial crisis in 70 years, which has caused consumers and businesses to sharply reduce their spending.

“He will inherit an economy that is in recession and … is likely to get worse before it gets better,” said Stuart Hoffman, chief economist for PNC Financial Services.

Still, investors seemed to draw hope Tuesday from the selection of a new presidential administration, sending stocks higher and shrugging off the latest in a series of grim economic reports.

The rally was a departure from usually subdued Election Day trading. The Dow Jones industrial average had not moved more than 1 percent in either direction on the day of a presidential election since 1984, when Ronald Reagan beat Walter Mondale and the Dow rose 1.2 percent.

Tuesday, the Dow surged 305.45 points, or 3.3 percent, to 9,625.28. The broader S&P 500 index advanced 4.1 percent, and the Nasdaq composite index gained 3.1 percent.

The day after the election usually brings a more significant bounce, analysts said.

“This rally is all about the election,” said Christopher Low, chief economist at Memphis-based FTN Financial. “Whoever wins, most of us voted for him, most of us will be happy tomorrow, and that tends to be market-positive.”

Investors also appeared to be focused on growing evidence that government efforts to address the credit crisis may be working and to shrug off signs that the economy is worsening.

Though there are no easy solutions to the global economic maelstrom, investors said the conclusion of the months-long presidential race would enable the winner to focus on policies for overcoming the crisis.

“Certainty is going to replace uncertainty,” said Ken Mayland, president of ClearView Economics, referring to the election results.

In another sign of the dismal economy, the Commerce Department said Tuesday that factory orders dropped 2.5 percent in September from August, more than three times as much as analysts had expected.

On Monday, automakers reported terrible October sales — down 45 percent at General Motors, 30 percent at Ford and 23 percent at Toyota.

And the government reported last week that the overall economy, as measured by the gross domestic product, shrank at an annual rate of 0.3 percent in the July-September quarter. Two straight quarters of lower GDP generally mean a recession, and many economists expect the fourth quarter to be worse than the third.

Unlike past elections in which the president-elect largely stayed on the sidelines until taking office in January, the winner and his team are expected to work closely with current Treasury Department officials in determining how the remainder of the government’s $700 billion bailout package will be earmarked.

Some experts believe the market is going through a bottoming process and won’t fall below October’s lows unless the economy weakens dramatically.

“If you look at the economic data that’s come out over the last two days you’d say, ‘Why would anybody in their right mind buy stocks?’ ” said Bill King, chief market strategist at M. Ramsey King Securities in Burr Ridge, Ill. “I’d say another three days to a week and then [the rally’s] going to fall apart.”

Material from The Associated Press, The Washington Post and Los Angeles Times was used in this report.