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Important stories about money and politics in the race for the White House
U.S. stocks ended Election Day trading Tuesday with their biggest gains in six weeks as nervous investors awaited the outcome of the presidential election, which is expected to affect markets around the world.
The S&P 500 ended the day up 1.2%, its best performance since mid-September, while the tech-heavy Nasdaq Composite Index rose 1.4%.
But the dollar hit a two-week low against a basket of currencies, closing 0.4% lower, as fears echoed across markets and investors worried about the fallout from the election.
“The good news is that the wait for the US election is over, but the bad news is it's going to be a long night for volatility,” said Bob Savage, head of market strategy and insights at BNY, summarizing Tuesday's mood. “risk”. Above. . . But given the uncertainty that is too close to decide, we are becoming timid. ”
Most emblematic of the volatility that characterized Tuesday's actions was Donald Trump's social media group, Trump Media & Technology. The stock price rose as much as 15%, but the sudden drop caused trading to be suspended. The stock ended up falling 1.1%.
The Mexican peso also had rough trading, falling to a two-year low of 20.35 pesos against the dollar, before rebounding and trading almost flat. Currencies often weaken when President Trump appears to be doing well.
“Expectations are high as we wait for the results,” said Mark Dowding, chief investment officer at RBC BlueBay Asset Management. “We all know how much is at stake in this election, but we won't know which way to jump until the votes are counted.”
Bitcoin rose about 3% to trade at just over $69,000, seen as a “Trump trade” due to the view that the former president would loosen regulations on cryptocurrencies if elected.
Wall Street is bracing for a long night, pausing software updates and reserving hotel rooms for out-of-town traders, among other logistics.
Edo Al Hussaini, senior rates analyst at Columbia Threadneedle, said his team has more cash than usual and can take advantage of it as opportunities become clearer in the market. said.
“No one wants to stick their neck out,” Al-Hussaini said, adding that he expected competition among investors to increase risks once the election results became more certain. “If you lag behind your peers, your prices will basically go down. You'll get rich quickly.”
The 10-year Treasury yield fell from its previous high on strong demand for $42 billion in new bonds sold by the Treasury on Tuesday. At 4.28%, there was little change on this day.
Investors are looking ahead to a crucial few days for global markets, with interest rate decisions from the U.S. Federal Reserve and Bank of England scheduled for Thursday, as the winner of the election remains unclear. I am concerned that this may be the case.
William Vaughn, an associate portfolio manager at Brandywine Global Investment Management, said the potential for uncertain election results by the time of the Fed meeting contributes to “significant uncertainty.” , highlighted that there was a four-day wait before The Associated Press determined the winner. 2020 Election.
The Ice BofA Move Index, a measure that closely monitors investors' expectations for future volatility in U.S. Treasuries, rose to 1 on Monday as a mix of political and interest rate uncertainties destabilized the $27 trillion market. It was the highest value in more than a year.
Analysts at UBS said the S&P 500's option levels suggest the index could be volatile over the weekend. The cost of purchasing protection against exchange rate fluctuations, such as the euro-dollar rate, has also skyrocketed.
The Vicks index, Wall Street's so-called fear gauge, has fallen to about 20.5 after rising to 23.4 late last week. Matt Orton, chief market strategist at Raymond James Investment Management, said Tuesday's positive stock market returns likely contributed to lower short-term implied volatility.
“We're going to see some pretty significant upside,” Orton said, adding, “I'm very optimistic about where the market is going once the noise starts to settle.”
Among investors, this knife-edge election is seen as a potential tipping point. If Republicans win the White House and both houses of Congress, investors are concerned that the combination of tariffs and tax cuts promised by President Trump could spur inflation and put upward pressure on interest rates.
This has led to a rise in the dollar and a rise in long-term Treasury yields in recent weeks.
