“Financial markets care more about policies than politics, President Trump’s policies are working,”–Paul Ebeling
Presidential debates do not change the course of history. Till today they have never been a major market mover, this time it was different.
Wednesday, the major US stock market indexes finished at: DJIA +329.04 at 27771.70, NAS Comp +82.26 at 11167.53, S&P 500 +27.53 at 3363.00 on strong volume, ending the Quarter in the Green.
- NAS Comp +24.5% YTD
- S&P 500 +4.1% YTD
- DJIA -2.7% YTD
- Russell 2000 -9.6% YTD
HeffX-LTN’s overall technical outlook for the major US stock market indexes is Bullish with a Very Bullish bias.
Expectations for Joe Biden to hold his own against President Trump as a debater were low. That proved to be true, setting the tone going forward in the Presidential race.
On average, going back to Y 1960, when televised debates started to become more of a happening in American politics, the S&P 500 index has fallen in the next day and posted lower returns in the 5-Day, 10-Day and 1-Month frames. Those are decliners of 0.3%, 0.9%, 1.8% and 2%, respectively.
Dow Jones Market Data notes that the data are skewed lower due to the Y 2008 financial crisis, when markets began the 1st stages of a violent fall, due in part to the souring in mortgage securities that spread across the globe.
Data from DJIA on the stock market’s performance after the 1st Presidential debates between the final front-runners show that a 0.14% decline on average on the day after the debate, a 1.51% decline from the 1st debate to the next, a 2.51% decline between the 1st debate and the final Presidential face-off and a 0.35% fall from the 1st debate to Election Day.
The median results skew higher, with the median average reflecting a 0.9% gain from the 1st debate to Election Day, the Dow Jones data show.
And there is the fact that there were not any Presidential debates from Ys 1964 to 1972, as President Lyndon Banes Johnson refused to debate Republican Presidential candidate Barry Goldwater in 1964 helping to usher in a frame of no debates.
My work shows is that market participants have been signaling who they think will win the Y 2020 election and they do not foresee major surprises. As most people likely know who they are going to vote for at this point.
A strong or weak showing by either candidate could potentially sway some on fence voters as it has Wednesday.
The majority of investors see President Trump as favorable to Wall Street, as they expect that Mr. Biden will increase corporate taxes and tighten regulations, which would weigh on stocks in the short run.
A solid performance by President Trump in the debate has caused some reformulation of betting odds and polls which bolster The Trump Policies.
Again, financial markets care more about policies than politics and President Trump’s policies are working.
Have a healthy day, Keep the Faith!