For weeks in the leadup to the midterm elections, analysts warned that the stock market would be highly volatile with slides from even some of the strongest stocks. Elections can cause uncertainty in the stock market, and this year was no exception.
On the flip side, analysts also predicted that stocks would rally after the midterms, with November and December having the potential to come close to or even exceed last year’s final quarter. That prediction may also be coming true, as all major indexes were up following yesterday’s poll results.
Dow, S&P 500, and NASDAQ Up on Thursday
All three major indexes were up on Thursday, hinting at what many hope to be a definitive end to almost six weeks of high volatility.
The Dow Jones Industrial Average, which tracks 30 of the strongest stocks on the market, rose by 2.1% after trading closed on Thursday. The S&P 500 Index was up by the same amount, and the NASDAQ Composite Index was up by a slightly higher 2.6%. The Russell 2000 Index, which tracks small capitalization stocks, was up 1.67% by the time the market closed, indicating that it’s not just the big growth stocks that recovered on the day.
Growth has allowed for some indexes to erase most of the losses from the last six weeks. The NASDAQ Composite is now up 2% for the last month and 9.67% for the year so far. The Dow Jones is in the green for every major metric, with 2.27% growth over the last month and 11.11% for the year.
Mike Read, analyst and founder of mobile based trading platform Pelican, said after the elections that “Following this week’s volatility and the FAANGs selloff this week, we’re likely to see traders getting back in and buying the dip. The elections have been a win for both the Republicans and the Democrats, and this will bring balance to the Stock Market .”
Like several other high-profile figures in the investment world, Read believes that the lower prices of today will lead to an end of year rally. While trade tensions still linger, there has been positive news recently from the President, indicating that the government is moving towards a new agreement with China.
Watch the Stock Market Closely Over the Next Week
Of course, a single day of gains cannot inspire complete confidence in the market. Evidence of a final-quarter rally will not be clear until the next week of trading, when investors begin to refocus without political uncertainty hanging over their decisions.
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