On Monday, uncertainty declined sharply following Sunday’s announcement that “no further action” would be taken with regard to presidential candidate Hillary Clinton’s email scandal. At the close, the S&P 500 had regained approximately half of a nine-day decline, rising 2.2%. The Nasdaq rose 2.4%, and the Dow industrials gained 2.1%.
The buyers’ rush, which ended the 500’s longest losing streak in about 36 years, also achieved its biggest gain since March. But while equities in general advanced, defensive investments declined: Gold (November) fell 1.9% to $1,278 per ounce and the benchmark 10-year Treasury fell in price as its yield rose to 1.826% from 1.783% on Friday. However, U.S. Crude oil (WTI) rose 1.9% to $44.89 per barrel.
The Wall Street Journal reported that the rally should be treated with caution since most moves in stocks related to elections are usually reversed. Yesterday’s rally caused investors to hedge their gains, especially with puts on widely traded exchange-traded funds.
At the close the Dow Jones Industrial Average rose 372 points at 18,260, the S&P 500 gained 46 points to close at 2,132, the Nasdaq gained 120 at 5,166, and the Russell 2000 closed at 1,192 for a gain of 29 points. The NYSE’s primary exchange traded 913 million shares with total volume of 3.4 billion shares, and the Nasdaq crossed 1.9 billion shares. On the Big Board advancers outpaced decliners by 4.5-to-1, and on the Nasdaq advancers led by 4-to-1. Blocks on the NYSE were almost unchanged vs. Friday’s total of 7,363.
The benchmark S&P 500 successfully, for now, tested its 200-day moving average with an opening rally that held and increased throughout the day. Note, however, that rallies and declines based on emotional news items don’t create or sustain major trends — for example, the Brexit sell-off that many feared was the beginning of a bear market. The primary uptrend was established within a mere nine sessions when the S&P 500 successfully closed above 2,115 in early July.
Conclusion: The bull market made a successful test of its major moving average. But the election isn’t over, and today will establish a whole new set of challenges for investors. Let’s not get hung up on one successful test, as impressive as it appears to be.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
