Stock Markets Up Despite Election Uncertainty

November 5, 2020
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Even with the outcome of the Presidential Election looking uncertain on Wednesday, investors displayed confidence in the markets, with all major indexes posting gains.

Benchmarks Up After Wednesday Trading

All three of the major U.S. indexes were up after closing on Wednesday.

  • The Dow Jones Industrial Average (DJIA) was up by 367.63 points or 1.34%.
  • The S&P 500 (SPX) was up by 74.28 points or 2.20%.
  • The NASDAQ Composite Index (COMP) was up by 430.21 points or 3.85%.

Unexpected growth on the heavily tech-weighted NASDAQ will be a relief to many investors. Tech stocks have lost some of their momentum from earlier in the year. The fact that this index outperformed the other benchmarks suggests that a turnaround might be coming for some of America’s largest and most popular stocks like Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Amazon (NASDAQ: AMZN).

Will the Election Impact Confidence Today?

President Donald Trump has vowed to wage a legal battle if he doesn’t secure the 270 electoral votes needed to win the election and gain a second term in the White House. The President has indicated that he will pursue a case in the Supreme Court to recount votes in Michigan and possibly Wisconsin, where his opponent Joe Biden won.

Even if all mail-in and absentee votes are counted this week, Americans may not know the outcome of the election for weeks to come.

This could cause volatility in the stock market. Investors dislike uncertainty, and if the outcome of the election goes down to a legal battle in the courts, the markets aren’t likely to respond well. However, inherent strength in some key stocks, better than expected earnings, and general sentiment that the economy is improving could all help to offset any potential election-related tension.

Of course, the Coronavirus Pandemic also remains a factor. Cases are now spiking again, which could cause some disruption to normal consumer patterns, which would potentially impact some key stocks.

An Exciting Week for Investors

Even if this week hasn’t been the most profitable for investors, it has been an exciting one. The current conditions are a reminder that it’s crucial to follow the news cycle closely, watch the dips and peaks on the market, and make informed stock purchase decisions based on evidence rather than emotion.

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