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Stocks Churn as Wall Street Waits on US Election: Markets Wrap
While markets looked relatively subdued in early Tuesday trading, nerves are running high as traders anticipate a long night of ballot counting and the potential for sharp swings no matter the outcome. Overhanging the mood on Wall Street remains the threat of a contested election that has little precedent.
“What you can see across markets now is that no one is ready to take clear investment positions on the election,” said Alexandre Hezez, chief investment officer at Groupe Banque Richelieu in Paris. “The uncertainty is palpable across all asset classes. There’s such a massive gap between the program of the two candidates that caution is of the essence.”
That sense of caution showed as stock investors held off on trading and volumes were relatively low in Europe. S&P 500 futures added 0.1%. Ten-year Treasury yields rose two basis points to 4.31%. The dollar weakened. Bitcoin gained 2.7%.
Tech outperformed, with Nasdaq 100 contracts climbing 0.2%. Palantir Technologies Inc. surged 13% in premarket trading on record profit and high demand for its artificial intelligence software. Nvidia Corp. and Tesla Inc. were up slightly.
Wall Street’s Great Election Trades Now Face the Moment of Truth
Across markets, there were clear signs of traders bracing for volatility. Options data suggests a 1.8% move in either direction for the S&P 500 on Wednesday, according to Citigroup’s head of equity trading strategy Stuart Kaiser.
US exchange-traded funds investing in Bitcoin shed $579.5 million on Monday, the highest daily net outflow on record. In Treasuries, the ICE BofA MOVE Index, a measure of implied fluctuations in yields, hit the highest since October 2023.
Currency markets, particularly the dollar and Mexican peso, were also being closely monitored as barometers for Trump versus Harris election strategies. For the Mexican peso, implied volatility for the currency is now near levels seen in sterling right before 2016’s Brexit vote.
“I would be watching for strength in the dollar, particularly versus the euro and emerging market currencies like the Mexican peso as a first reaction, particularly if the results start to indicate that Republicans are likely to take the White House and control of Congress,” said Ed Al-Hussainy, global rates strategist at Columbia Threadneedle. “The opposite if there is a Democratic sweep.”
Other investors have been following baskets of stocks tied to a Democratic and Republican victories. The Goldman Sachs Group index linked to a Trump win started to fade as October came to an end, and the Harris one has since gained momentum.
Investors were also looking ahead to Thursday’s Federal Reserve’s decision and Jerome Powell’s press conference, where he’ll give details on the central bank’s interest-rate path.
“The big question is, can the Fed deliver four to five cuts in 2025, or is there this fear that inflation will stop the Fed halfway through its tightening cycle?” said Ludovic Subran, chief economist at Allianz SE. The latter “will send shockwaves through the US economy.”
Corporate Highlights:
Boeing Co. shares rose in US premarket trading as workers voted to end a strike that’s crippled jetliner production for 53 days.
Palantir Technologies Inc. gained in early trading after the firm reported quarterly revenue that beat analysts’ estimates, citing high demand for its artificial intelligence software.
Nintendo Co. slashed its full-year outlook after reporting its fifth straight quarter of profit declines on flagging demand for its Switch console.
Vodafone-Three’s ￡15 billion deal ($19.5 billion) merger would be approved if the firms committed to investing in a large scale upgrade of the UK’s mobile network.
Saudi Arabia’s oil giant Aramco kept up its $31 billion dividend to help feed state coffers, despite rising debt.
Apple Inc. is exploring a push into smart glasses with an internal study of products currently on the market.
Schroders Plc shares tumbled the most in more than four years after the firm reported ￡2.3 billion ($3 billion) of quarterly outflows and warned of ￡10 billion more to come.