The stock market is betting on Joe Biden
We have to believe that investors settled the fate of the
presidential election yesterday: the appreciable rise in Wall Street and its
major stock market indexes suggests a victory for Democrat Joe Biden.
Whether Donald Trump could win or challenge the results of the US
presidential election seemed to slide like water on the back of a duck
yesterday.
This is why the Dow Jones (+ 1.3%), the S&P 500 (+ 2.2%) and
the Nasdaq (+ 3.9%) recorded significant gains the day after the elections,
despite the fact that no winner has yet been officially declared.
Yesterday's strong trading session followed two previous strong
rally sessions, which “already” anticipated a victory for Joe Biden.
The stock market gains recorded in this US presidential election
week so far amount to:
Dow Jones: + 3.7%
S&P 500: + 5.3%
Nasdaq: + 6.2%
For its part, the Canadian stock market gained some 2.7% during
these first three trading sessions of the week.
LET'S BE REALISTIC
Let's come back to earth. Joe Biden may lead, he has yet to be
declared the winner. Donald Trump didn’t throw in the towel, far from it.
Whether Biden wins in the end is one thing. But if he does not have
the Senate on board, he will have difficulty implementing the hefty election
platform, which is well received by investors. And if that were the case, the
election of Biden would not be as promising for the stock market.
With the tuning done, there can be no guarantee that this bullish
streak will continue. And vice versa, of course.
On Wall Street, we are not close to a turnaround.
As proof. Last week, the same major indices on the New York Stock
Exchange took a solid nosedive, under the pretext that the high-tech headlines
were overvalued, that the coronavirus pandemic was gaining ground, that the
elections were causing concern ...
And this week, it's the opposite, we are treated to a completely
different scenario as the same overvalued headlines this time pull the stock
market up, the pandemic continues to crush us, and the presidential election
does not. is not come full circle as investors anticipated a Democratic wave.
VOLATILITY 2020
Anyway, I remind you that since the beginning of the year 2020, we
have had the right to roller coasters: historical records are reached on
February 20, which are followed by monstrous falls of 30% and more until 'to
March 23.
Subsequently, the indices exploded by 30 to 40%, reaching new
records for the S&P 500 and the Nasdaq in September.
From then on, the relapse began (almost 10%) until Friday of last
week. And in this US election week, most indices are up 5%.
Is it volatile enough for your taste? Trying to guess what the
stock market will do in the short term is as random as betting in the casino.
That said with all "respect" to the casino!
DISPUTES
In the 2000 election challenge, where George W. Bush and Al Gore
vied for the presidency, Wall Street fell 5% between election day and December
12, 2000, when Gore finally threw the towel.
During the Bush and Gore days, the stock market was floating in the
bubble of internet and telecom stocks.
Today, it is the tech giants who are inflating the stock market
bubble as we go through a severe economic crisis in these times of the COVID-19
pandemic.
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