The most chaotic Presidential election season in anyone’s memory is winding down. On the eve of voting the FBI chief re-opened the previously closed Clinton email issue and the market blinked. Read our article if you missed it, Why Clinton’s Emails Matter to the Stock Market. Then the FBI chief announced just two days prior to the election that never mind, there is no new info and no problem. The stock market likes Hillary and stocks went up. Investor’s Business Daily reports that stocks are up big on Clinton relief.
Stocks roared higher at the open Monday, as the market looks for relief from a nine-day pullback.
The Dow Jones industrial average and the S&P 500 both rallied nearly 1.5%, while the Nasdaq composite gained 1.6%. The Russell 2000, which slumped 2% last week, rose 1.7%.
Stock futures and global markets rallied aggressively after FBI Director James Comey issued a letter to Congress. Comey declared a review of the emails that led to the agency’s reopening its investigation into presidential candidate Hillary Clinton did not alter the bureau’s prior conclusion that no charges were warranted against her at this time.
Tokyo’s Nikkei 225 jumped 1.6%. In Europe, the CAC 40 traded up 1.8% and Frankfurt’s DAX was 1.7% higher near midday. The FTSE 100 in London climbed 1.5%.
The point is that Clinton is likely to win the election and because the market likes predictability they like Clinton. The general consensus is that if Trump made it in the market would immediately fall as would the U.S. dollar.
Depression Fades and Hope Returns
Investors do not necessarily like Hillary Clinton but the market likes Hillary because people believe that stocks will go up 11% if she is elected and much of that projected increase was already priced into the market before the late FBI bombshell followed 9 days later by an oops. The Wall Street Journal reports that stocks and the dollar jump on the most recent news.
Stocks, oil and the dollar jumped Monday, while gold and the yen sold off after the FBI said no new evidence was found to warrant charges against presidential candidate Hillary Clinton.
Monday’s gains marked a rebound for stocks after the S&P 500 posted nine consecutive sessions of losses-its most prolonged streak of declines in almost 36 years. Some investors blamed tightening polls for the fall, and interpreted the FBI’s announcement as enhancing Mrs. Clinton’s chances of winning in this week’s race as well as removing an element of uncertainty in the event she is elected.
Many investors believe a victory for Mrs. Clinton would be more supportive of risky assets such as stocks, at least in the short term, and that a period of market calm following her victory would also help keep the Federal Reserve on track to raise interest rates at its next meeting, propping up the dollar.
The fact that the S&P 500 posted its largest number of consecutive losing days since 1980 is a measure of how concerned the market was. Time will tell how well the market does after the election but for now the market likes Hillary and is pleased that her chances of winning just improved.