“An Eye on Tomorrow” – Vista Partners Daily Market Recap 11/5/2018
Stocks ended the day mixed on Monday as voters prepare to hit the polls on Election Day and investors kept an eye on tomorrow’s events. The results of this election may lead to significant changes in Congress, and this uncertainty was paralleled in the market today. The S&P 500 managed to gain 0.56% (15.26 points) and the Dow rose 0.76% (190.87 points) by the end of trade. On the other hand, the Nasdaq slipped into the red with losses of 0.38% (28.14 points).
Most components of the Dow saw moderate gains today, with IBM’s (IBM) gains of 3.80% and Chevron’s (CVX) increase of 3.67% leading the way. Apple (AAPL) continued to drag down the market today as it slipped a further 2.84%. Apart from the Dow, Atossa Genetics (ATOS) also saw slight gains of 0.75%.
If past patterns are any indication, there will likely be an upward tick in the market no matter the outcome of tomorrow’s election – but just how big that rally will be is an open question. Thomas Lee, an analyst with Fundstrat Global Advisors, has looked at market data going back to 1936 to help predict what may happen. According to his research, the market gains on average 1.9% in the following year if control of the House trades hands, but if the current party retains a majority that average increases to 14.3%.
With the current volatility of the markets, though, there could be negative consequences if the outcome of the election remains uncertain for any period of time. Lori Calvasina, with RBC Captial, pointed to the 2000 election where the outcomes were uncertain for nearly a month. “At that time, the equity market was already tumbling, and it continued to fall while the results were being determined.”
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