Stocks Surge in Pre-Election Buying Spree
As we had noted last week, U.S. equity markets have had a long history of rising following the Presidential elections. Staying on-trend, U.S. stock indexes booked their best five-day period since April as investors grabbed stocks, despite the uncertainty of who would be the winner of The Presidential Reality Show®.
Stocks and derivatives and corporate, federal, and municipal bonds all rose; Bitcoin’s price exceeded $15,000 for the first time since January 2018. Thus, our forecasts that the cryptocurrency would gain strength when it solidified above $9,500 have come to pass.
The Dow Jones Industrial Average gained 7.3 percent, the S&P rose 6.9 percent, and the NASDAQ 9 percent, closing on 5 November at 11,890.93, its third-highest mark ever.
And, as we had noted, regardless of who won the race, there would be massive doses of monetary methadone injected into the markets and the economy.
PUBLISHER’S NOTE: Four years ago, the markets had priced in a Hillary Clinton victory and many analysts had forecast a market crash if Donald Trump became president. After plunging in the hours following the election, the markets recovered, as the Trends Journal predicted, and went on to set new records.
Also, with the Senate most likely staying Republican, Wall Street worries about higher taxes and more regulations from a Democratic controlled Congress have eased. “The mantra seemed to be ‘find some good news and keep buying,’” Mike Bailey, Research Director at FBB Capital, told the Wall Street Journal.
Markets had bet on a Democratic electoral sweep, which would have brightened prospects for a larger, new stimulus program. Although markets still expect a new stimulus measure, its size and scope are now seen as more narrow.
Global Spike
Markets around the world also rose sharply following the U.S. presidential election.
The Stoxx Europe 600 index showed its best weekly gain since June, the Shanghai Composite Index ended its best week since July, and Japan’s Nikkei index finished its best week since May.
The U.S. Federal Reserve’s reassurance to leave interest rates unchanged added energy to the markets, although the Fed warned again of risks to the economy related to the COVID lockdowns.
With the media continually hyping the worst of COVID is yet to come, the money junkies are gambling heavier before hard data shows that the “Greatest Depression” has begun.
