Stocks Drift Lower Ahead of Trump Vs. Hillary Showdown

Advertisement

U.S. equities inched lower on Friday as excitement over the Federal Reserve’s “no hike” policy decision on Wednesday was replaced by a mixture of apprehension and fear ahead of Monday’s Super Bowl-sized presidential debate between Hillary Clinton and Donald Trump. With the polls neck-and-neck between two political candidates that couldn’t represent a more bifurcated vision of America’s future, the outcome of the 90-minute face off is critical.

Policy dependent areas include monetary policy, energy stocks, healthcare, trade policy and immigration. All of this will have an effect on the course of corporate profits and interest rates in 2017. So it’s clearly a big deal.

In the end, the Dow Jones Industrial Average lost 0.7%, the S&P 500 Index shed 0.6%, the Nasdaq Composite dropped 0.6% and the Russell 2000 finished 70 basis points lower. Treasury bonds were mostly stronger, the dollar was mixed, gold lost 0.2% and oil fell 4% as the see-saw of expectations for an OPEC production freeze oscillated again. After some pre-meeting talks with Iran, Saudi officials downplayed the odds of an agreement later this month in Algiers.

No surprise then that energy stocks led the decliners, down 1.3%. Yahoo! Inc. (NASDAQ:YHOO) fell on data breach headlines while Facebook Inc (NASDAQ:FB) lost 1.6% on a WSJ story the company overestimated video ad viewing times. This took the wind out of the market’s sails, with upward progress being led by tech stocks on Wednesday and Thursday.

Defensive telecom stocks led the way with a 0.4% gain. Twitter Inc (NYSE:TWTR), the onetime IPO momentum sweetheart, surged 21.4% returning to early January highs thanks to reports the company is moving closer to a sale and may receive a formal bid soon with potential suitors including Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL).

gproGoPro Inc (NASDAQ:GPRO) gained another 6.9% for Edge subscribers, breaking out of its year-to-date trading range, on building excitement for its Karma video drone and Hero 5 action camera.

Boston Fed President Rosengren explained his dissenting vote against the Fed statement this week (one of three votes against it) by highlighting recent improvements in the labor market, noting wage growth is above the 2% level that seemed intractable for a long time. While admitting the economy still needs an overall accommodative monetary policy stance, his concern is that a tightening labor market risks an overheating — something that historically has led to a new recession, not full employment.

His desire is for a modest, gradual tightening that prevents imbalances from accumulating in the financial system and the economy as a whole.

Turning to Monday’s presidential faceoff, the televised showdown is expected to pull in close to 100 million viewers. Compare that to the 67 million viewers for the first 2012 presidential debate or the 52 million that tuned into the first 2008 debate.

As noted by Nick Collas at boutique brokerage firm Convergex, if this were a $9.99 pay-per-view event, it would easily pull in $1 billion and has the potential to move markets:

“With all that attention, the debate has the potential to shape not just political opinions but also investor psychology. Just look back to Secretary Clinton’s comments about the EpiPen pricing controversy last month and the subsequent drop in the NASDAQ Biotech Index for evidence that politics can touch asset prices as surely as the levers of a voting booth. And that was not an isolated case: one tweet from candidate Clinton last September had a similar effect on the sector.”

As for Trump, who is enjoying reports Kim Kardashian may support his candidacy, a selloff in the Mexican peso reflects the volatility that could result from his rising chances of victory and that realization his energetic nationalism could reshape the bi-partisan “status quo” that’s been in play for decades.

Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.

More From InvestorPlace


Article printed from InvestorPlace Media, https://investorplace.com/2016/09/trump-clinton-stock-market-today-nyse-dow-jones-industrial-average-investing-news/.

©2024 InvestorPlace Media, LLC