Has the post-election stock market crash already begun?
Is this rush for the exits going to turn into a stampede? Stock prices have been plummeting in recent days, and most of the talking heads on television have been blaming the declines on the COVID-19 pandemic. Yes, it is true that the number of confirmed cases in the United States is spiking again, but I don’t think that alone is enough to account for what we have been witnessing. Instead, I believe that the primary reason why stocks have been tumbling is because there is so much uncertainty about what is going to take place next week. Investors hate uncertainty, and it appears that many of them would prefer to be on the sidelines rather than gamble on the outcome of this election.
On Wednesday, the Dow Jones Industrial Average was down another 943 points, and that was the worst day that we have seen since June 11th…
The Dow Jones Industrial Average dropped 943.24 points, or 3.4%, to 26,519.95, posting its fourth straight negative session. The S&P 500 slid 3.5%, or 119.65 points, to 3,271.03, while the Nasdaq Composite fell 3.7%, or 426.48 points, to 11,004.87. The Dow and the S&P 500 both suffered their worst day since June 11.
Overall, stock prices have now fallen for four trading sessions in a row.
Will Thursday make it five?
I just can’t see a whole lot of investors wanting to jump into the market right before Election Day. Many have warned that an extended period of time when we don’t know the winner of the presidential election would be a “nightmare scenario” for investors, and right now it appears to be quite likely that we are headed for just such a scenario.
Yes, it is still possible that we could witness a landslide victory for either Joe Biden or Donald Trump that would bring the race to a conclusion very rapidly, and such an outcome would be greatly welcomed by the financial markets.
Unfortunately, it is probably much more likely that the election results will be bitterly contested, and the counting of mail-in ballots and legal fights over which votes to count could take weeks to resolve.