Prepare for tumultuous markets! Election chaos might be looming

Market Monster
4 min readSep 25, 2020

How did major indexes fare?

Don’t try to predict the market because it’s hard to succeed.

The U.S. market rebounded a little on Thursday after a sharp selloff on the previous day. The curve of $S&P 500 index(.SPX.US)$ in this week is as follows:

Stock benchmark indexes ended with modest gains Thursday, reflecting a market that has struggled to find its footing amid signs of softening economic data and a raft of uncertainties ahead.

Source: moomoo

Stocks in Asia rose Friday with U.S. equity futures as investors weighed the chances of a new American stimulus package.

Japanese and South Korean shares opened higher. S&P 500 contracts climbed after a volatile U.S. session on Thursday.

Source: Bloomberg

What drove the market?

The stimulus plan worries:

Stocks were wobbly for most of Thursday, as investors waded through a morass of issues, including rancor on Capitol Hill, which has overshadowed progress on another pandemic spending bill.

Market participants worry a lack of fresh stimulus would derail an economic rebound.

The stimulus plan progress:

In a bid to restart negotiations, House Democratic lawmakers have begun to prepare a new $2.4 trillion coronavirus aid package($1 trillion smaller), according to multiple published reports on Thursday.

The news may have helped provide stocks with a brief boost in the last hour of trading Thursday, though there are still disagreements over the size and scope of additional aid.

Unexpected rising jobless claims:

Jobless claims rose 4,000 to 870,000(+6,000 to 866,000 the previous week) the Labor Department said Thursday. Economists surveyed by MarketWatch had been looking for claims to decline to 850,000.

Mike Loewengart, managing director for investment strategy in emailed remarks,

While jobless claims under a million for four straight weeks could be considered a positive, we’re staring down a pretty stagnant labor market.

Trump&Election chaos:

On top of that, fears of a contested presidential election on Nov. 3 also have begun to weigh on sentiment, analysts said. President Donald Trump on Wednesday refused to commit to a peaceful transition of power following the election, raising doubts about election mail-in ballots.

What’s new on Wall Street?

Powell emphasized again a fiscal package will be needed

  • Federal Reserve Chairman Jerome Powell emphasized during a third day of congressional testimony Thursday that a fiscal package will be needed to keep the U.S. economy’s recent gains from sliding backward.

Election chaos might be looming

  • It’s a rare moment in U.S. history, with financial markets expecting the months after a presidential election to be dangerously erratic.
  • The Cboe Volatility Index’s futures market indicates that investors are preparing for tumultuous financial and political conditions in November, December, and January. Until recently, investors had priced October as a month of great volatility, and the following months as less.

Novavax starts a Phase 3 trial of its vaccine

  • On Thursday, $Novavax Inc(NVAX.US)$ said it will start a Phase 3 trial of its vaccine among 10,000 volunteers in the U.K.
  • News of the U.K. trial came after the close of trading Thursday, so Novavax stock shares soared more than 7% in the extended trade.

Costco’s latest strong quarter still wasn’t good enough

  • $Costco Wholesale Corp(COST.US)$ stock was falling in after-hours trading Thursday, despite a strong fiscal fourth-quarter earnings report.
  • Here’s how the company did compared with what analysts were expecting:
  • Revenue: $52.28 billion vs. $52.1 billion, expected
  • Earnings per share: $3.13 vs. $2.85, expected.
  • Same-store sales climbed 11.4%, just ahead of the 11% consensus estimate.

Source: Bloomberg, Barron’s, MarketWatch, CNBC