Markets mixed overnight. S&P 500 Index opened little changed after taking a breather yesterday amid noisy headlines around fiscal stimulus and vaccine trials. Asian markets finished mixed with South Korea, China, and Australia trading lower, while European stocks are modestly lower in midday trading. Following a roughly 10% rally since the September low for the S&P 500, it comes as no surprise that markets take a short breather to consolidate the gains.
Mixed elections signals from markets. While performance for the S&P 500 has been strong thus far in the three months leading up to the election—which has historically been a strong indicator for the incumbent party—underlying securities may be pointing another direction. With help from our friends at Strategas Research Partners, we take a look at policy-based portfolios to see what the market may be telling us about the upcoming election in today’s LPL Research blog.
Brexit Update. Negotiations over the United Kingdom’s (UK) withdrawal from the European Union (EU) are continuing as the October 15th deadline, imposed by British Prime Minister Boris Johnson, to reach a wider trade agreement approaches. One key sticking point appears to be EU, specifically French, access to UK fishing waters. While the fishing industry is an emotive subject in the UK, it makes up only 0.12% of the UK’s GDP; therefore, we do not anticipate either side allowing this issue to precipitate a “No-deal” Brexit that could be economically damaging to both sides.
Technical update. Markets sold off yesterday, as both the Dow and S&P 500 fell 0.6%. The Nasdaq outperformed, but still posted a 10 basis point loss after spending most of the day in the green. The S&P 500 closed at 3512, and has short-term tactical support at 3425, about 2.5% below yesterday’s close.
COVID-19 news. New cases in the United States have now risen by double-digit percentages for seven straight days, pushing the seven-day moving average above 51,000 to a two-month high (source: COVID Tracking Project). Hospitalizations continue to inch higher but remain well below the August peaks. New restrictions may be announced in France and Spain today while the UK faces pressure to lock down. Eli Lilly halted its antibody trial due to safety concerns after Johnson & Johnson paused its vaccine trial Tuesday due to an unexpected illness. Pauses and stops in vaccine trials are common, but we are watching the progress very closely.
LPL Research in the Media
LPL Financial’s Chief Market Strategist Ryan Detrick was featured in MarketWatch to talk about the election.
LPL Research Equity Strategist Jeff Buchbinder was quoted in Yahoo! Finance.
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