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Election tensions, and the state of the market

by | Nov 4, 2020 | Bulletins

Hello friends,

While we stand in a non-partisan position always, we are also awake to the forces and systems of our reality that affect our well-being as it relates to our financial wealth. On this dramatic election-results day, let’s take a look at the market. The last twenty-four hours have been eye-opening and a mix of emotions may have surfaced for you. Below we review what we see in the market, and acknowledge the emotional tension around the current events.

Last night’s election was inconclusive. Six or seven states still have not reported firm results. Current projections indicate that Biden may squeak out a slim victory over the incumbent President Trump, but it remains unknown. While the presidential race is clouded with mystery, one thing looks clear in the market, we will not be seeing the blue wave that the market started pricing in September. Republicans will likely retain control over the Senate.

The market movements today as of its close at 4PM ET:
Dow: Up 1.34%, Nasdaq: Up 3.85%, S&P 500: Up 2.20%.

The market is surging, the day after an undecided election. Initially, it seems preposterous with this kind of uncertainty the market should be rising. One explanation is that a Republican-controlled Senate would create a split legislative branch, where neither party can push an aggressive agenda. Whoever wins the election, neither party will have complete control, making it almost impossible for polarizing proposals to be voted into law.

It appears, to us, that the market is currently gauging a Biden presidency, but the Republicans will hold on to the Senate. With this potential, we are seeing a reversal of September trends. The medical and tech sectors are surging, and financials are slightly lagging. Medicals are rising because a blue wave would put more pressure on lowering drug prices, and ultimately top and bottom lines. Tech is surging due to avoidance of heftier regulations that could have been possible with a blue wave. Financials and a few other sectors are lagging, due to a potential smaller stimulus later this year or early 2021.

What pricing may not be in the market? Our biggest area of concern that the market is not pricing is a contested election by President Trump. If Biden wins the presidency, we were told a peaceful transition of power was not likely that does not involve the courts. A contention like this would be more significant than the election in 2000. Dragging out weeks or months could have significant repercussions on the market. Volatility would continue throughout that uncertainty, even with a split legislative branch.

With competitive and high-energy elections, it is impossible to be calm and peaceful. We imagine you are feeling a mix of emotions: fear, sadness, anger. Emotions seep into every aspect of life. While we are not therapists, we are skilled in generous listening and available for conversation to address your concerns. Know that we are here to support you and please don’t hesitate to reach out with your questions, concerns, or if you would just like to chat.

~ With care and concern,
from all of us at Colman Knight



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