Stocks opened higher. US equities reversed earlier losses following a contentious US presidential debate Tuesday night that raised more questions of a potentially contested election. On the flipside, House Speaker Nancy Pelosi noted positive discussions with US Treasury Secretary Steven Mnuchin regarding an upcoming COVID-19 stimulus deal. Asian markets were mixed overnight; European shares are little changed.
Raucous debate, but not for markets. S&P 500 futures fell overnight, but the US dollar is up this morning, sending opposite signals on any market impact from Tuesday night’s presidential debate, and both well within the range of normal market movements. There were three key questions for us heading into the debate: 1) Will we learn anything new about policy? 2) Will it meaningfully change the election odds? and 3) Will it increase market participants’ sense of uncertainty around the election? The answers are no, no, and maybe. For a deeper dive into our view of the market implications of last night’s debate, see today’s LPL Research blog.
Confidence is on the rise. The Conference Board’s Consumer Confidence Index jumped to 101.8 from August’s 86.3, beating estimates by the most since November 2011 and delivering the largest month-over-month increase since April 2003. Not surprisingly, the majority of the previous largest monthly increases occurred at the end of a recession or beginning of a new expansion. This is yet another clue the recession is likely over. Given the consumer makes up two-thirds of gross domestic product (GDP), this could bode well for the recovery.
Technical update. Stocks are pointing lower again today, following a 0.5% loss for the S&P 500 Index on Tuesday. The index has failed to recapture its 50-day moving average (3355) over the past few days, but continues to have strong support at last week’s lows just above 3200.
COVID-19 news. New case growth in the United States tumbled 24% week over week to below 37,000, bringing the seven-day average down by 2% to 42,182, though that decline may be overstated due to data collection issues (source: COVID Tracking Project). Hospitalizations unfortunately went the other direction Tuesday, jumping 24% week over week to the highest level since September 3. The daily rate of positive tests in New York City exceeded 3% for the first time in several months. Regeneron said its antibody cocktail may reduce virus levels and symptoms in non-hospitalized patients with mild cases.
LPL Research in the Media
LPL Financial Chief Market Strategist Ryan Detrick was quoted in Yahoo! Finance about the election and interviewed on Nasdaq Trade Talks to discuss the recent volatility.
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