(Justin Vaughn, Editor, Options Trading Report)
After a week of peaks and valleys, last Friday ended on a peak, with investors and traders coming off the sidelines and stepping into market action. Stock market activity was brisk at opening with the Dow Jones Industrial Average heading North on the way to adding 289 points. The Nasdaq Composite and S&P 500 followed, up 0.8% and 0.1% respectively. Value stocks were the heroes of the day, while techs and chips were on the sidelines. Stock data released Friday showed stronger sales growth for October, exceeding expectations by economists. The October jobs report was a drag earlier in the week, but it seemed the market digested it after balancing other fresh data. “We still think that the U.S. economy is ahead of other economies–it’s the engine of growth for the global economy,” said Colin Graham, head of multi asset strategies at Robeco. The Bond market continued strong with the 10-year U.S. Treasury yield finished October on a tear, the biggest gain since April, at a high of 4.361% after a seven week stretch of gains, the longest since October 2022. “Yields move in opposite directions of bond prices,” initially fell Friday after the weaker-than-expected October Jobs Report. As the election approaches, much speculation is rampant as to how the Federal Reserve budget deficit will be addressed by the candidates, with the general feeling that former President Trump would create a larger deficit. Some investors are factoring in that the U.S. budget will grow, especially if early favorite Republican Donald Trump wins. “The markets are marking time right now,” said Jim Ledenrhal, chief equity strategist at Cerity Partners. “They don’t know who’s going to get elected. We’re all just going to sit and watch this movie.” Tuesday will ‘tell all.’
Monday’s market was “treading water” with little direction as the general focus was elsewhere… Election Day, Tuesday commanded full attention as ‘the vote’ will put-to-bed the lingering questions of the campaign. All markets were shaky, with the Dow Jones Industrial Average giving back 258 points, with both the S&P 500 and Nasdaq Composite losing 0.3% in a stagnant market environment. Middle East fears continued, driving oil higher, as a possible retaliatory attack by Iran raised concerns. Oil edged higher as benchmark crude finished at $75.08 a barrel. OPEC Partners “put off” a planned production increase, citing continuing tensions in the Middle East. The U.S. 10 year Treasury yield fell slightly to 4.309% after Friday’s close of 4.361%, (highest finish since July 2).
America woke up Wednesday to a resounding victory by Republican candidate Donald Trump, the winner of the popular vote and the winner of the electoral vote count, 295 to 226. Trump won big, sweeping many critical battleground states and most all sectors of the country including Latino and Hispanic groups and younger voters. He was decisively stronger in heavy population areas, big cities and strong as before in rural areas. He was a strong ‘vote-getter’ in this election leaving no question on his priorities and strong fiscal policies. He was Donald Trump in the truest sense.
Markets opened Wednesday strong, with all indexes soaring…with the Dow Jones Industrial Average ‘blazing’ up 1,500 points at the close! Investors and traders pounded the indexes with resolve, as the S&P 500, Nasdaq Composite, and the Russell 2000 responded with a flood of gains.
RUMBLINGS ON THE STREET
Ross Mayfield, investment strategist at Baird, WSJ – “There’s a lot of relief that there’s a clear-cut outcome and that markets can move on to things that are quite frankly more important than who sits in the White House.”
Aaron Back, writer for Barron’s – “Don’t miss the forest for the trees: A one-off miss in jobs doesn’t change the overwhelming message being sent from many sources. The American economy is in good health.”
Nicholas Colas, co-founder of DataTrek Research, WSJ – “They are a heavyweight bunch of names, (Magnificent seven). Both the blessings and the curse of the S&P is that it is super reliant on seven, eight names.”
President elect Trump, WSJ – “This is a magnificent victory for the American people,” Trump said in a celebration in West Palm Beach, Florida, early Wednesday.
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