The US stock market displayed hesitancy on Monday, a day before the crucial Election Day. Investors remained cautious, their decisions seemingly influenced by the incredibly tight presidential race between Vice President Kamala Harris and former President Donald Trump. While polls show a narrow lead for Harris in some surveys, prediction markets present a more nuanced picture, reflecting the uncertainty surrounding the outcome and its potential impact on the economy.
Key Takeaways: A Tight Race and Market Uncertainty
- Neck-and-Neck Presidential Race: The election remains incredibly close, with polls showing a minimal margin between Harris and Trump, creating substantial market uncertainty.
- Contradictory Signals: Traditional polls suggest a Harris lead, while prediction markets favor Trump, highlighting the inherent volatility and difficulty in predicting the outcome.
- Market Reaction: The US stock market reflected this uncertainty, with mixed performances across different indices. While some sectors, particularly energy and renewable energy, responded to potential election outcomes, others moved cautiously.
- Economic Implications: The election’s impact on the economy is expected to be significant, particularly regarding fiscal policy, trade relations, and environmental regulations. The market is waiting with bated breath for the results.
- High-Stakes Betting: The substantial sums being wagered in prediction markets highlight the intense interest and uncertainty surrounding the election’s outcome.
A Nation Divided: The Close Presidential Race
The upcoming election is shaping up to be one of the closest in recent history. According to the New York Times national polling average, Vice President Kamala Harris holds a slim 1-point lead over former President Donald Trump. However, a PBS News/NPR/Marist poll reveals a slightly more significant 4-point lead for Harris among likely voters nationally. This disparity underscores the difficulty in accurately predicting the election’s outcome in such a closely contested race. Nate Cohn, chief political analyst for the New York Times, aptly summarized the situation: “Neither candidate holds a meaningful edge in enough states to win 270 electoral votes. In the history of modern polling, there’s never been a race where the final polls showed such a close contest.”
Prediction Markets Add to the Intrigue
Adding another layer of complexity, prediction markets, such as those regulated by the CFTC-regulated Kalshi, present a different perspective. Kalshi currently gives Trump a 53% chance of winning, although these odds have been trending downwards in recent weeks. This discrepancy between traditional polls and prediction markets is particularly interesting in light of the significant sums being bet. For instance, a bettor on Polymarket reportedly wagered as much as $43 million on a Trump victory. The involvement of such “whale” bettors introduces another element of uncertainty, as their bets can significantly influence market sentiment.
Market Reaction: Cautious Optimism and Sectoral Shifts
The uncertainty surrounding the election outcome is reflected in Monday’s market performance. The S&P 500 slipped 0.2%, while the Dow Jones Industrial Average fell 0.6%, reaching its lowest intraday level since mid-September. Conversely, the Russell 2000, an index of small-cap stocks, performed better, rising 1%. The Nasdaq 100 also retreated, dipping below the 20,000 mark, showing that larger tech stocks are also less certain about the future. This divergence in performance across various indices underscores the complex and nuanced reactions within the stock market.
Treasury Yields and the Dollar Weaken
Investors’ reactions extended beyond the stock markets. Treasury yields fell by nearly 10 basis points. This suggests that investors are scaling back their positions linked to policies associated with Trump, such as potentially inflationary measures like increased tariffs and expansionary fiscal policies. Furthermore, the dollar also weakened, declining by 0.5%, suggesting a shift in investor sentiment influenced by election-related uncertainty.
Sectoral Winners and Losers
Specific sectors showed varying degrees of sensitivity to the election’s potential outcomes. An increase in the likelihood of a Harris victory, seen as more favorable to renewable energy policies, led to a boost in solar and renewable energy stocks. The Invesco Solar ETF (TAN) climbed 3.6%, reflecting this positive sentiment. While more conservative policies are associated with the alternative candidate, potentially favoring Oil and Gas stocks and the global commodity market, The possibility of a Harris victory possibly creating increased regulatory pressure on the oil and gas sector, but a more cautious approach to energy regulation has also been observed. Oil prices surged 3% after OPEC+ postponed an anticipated production hike, leading to a boost in energy stocks; Exxon Mobil Corp. (XOM) jumped 3%, its largest single-day gain since late June.
Gold held relatively steady at $2,740, while Bitcoin (BTC/USD) fell over 1%, dropping below $68,000, showing investors remain skittish to make large swings while the election outcome is pending. This behavior shows the impact of uncertainty on the volatile nature of cryptocurrencies.
Market Details: Indices, ETFs, and Stock Movers
Monday’s Performance in Major US Indices, ETFs
A closer look at the performance of major US indices and ETFs brings further clarity to Monday’s market activity:
| Major Indices | Price | 1-day %chg |
|---|---|---|
| Russell 2000 | 2,230.95 | 1.0% |
| S&P 500 | 5,715.31 | -0.2% |
| Nasdaq 100 | 19,978.22 | -0.3% |
| Dow Jones | 41,807.92 | -0.6% |
Updated at 12:45 p.m. ET
According to Benzinga Pro data:
- The SPDR S&P 500 ETF Trust (SPY) rose 0.1% to $570.22.
- The SPDR Dow Jones Industrial Average (DIA) fell 0.5% to $418.44.
- The tech-heavy Invesco QQQ Trust Series (QQQ) fell 0.2% to $486.77.
- The iShares Russell 2000 ETF (IWM) rose 1.1% to $221.27.
- The Energy Select Sector SPDR Fund (XLE) outperformed, rising 1.7%. The Utilities Select Sector SPDR Fund (XLU) lagged, down 1.5%.
Monday’s Stock Movers
Several stocks reacted to earnings reports and general market sentiment. Notable movers include:
- Zoetis Inc. (ZTS), down 3.9%
- Constellation Energy Corp. (CEG), down 10.5%
- Marriott International (MAR), down 1.8%
- Fidelity National Information Services, Inc. (FIS), down 0.4%
- Public Service Enterprise Group Inc (PEG), down 5.9%
- TPG Inc. (TPG), down 5.5%
- Fox Corp. (FOX), up 3.7%
- YUM China Holdings (YUMC), up 7.9%
- Loews Corp. (L), down 4.8%
Several additional companies are set to release earnings after the close, including Vertex Pharmaceuticals Inc. (VRTX), Palantir Technologies Inc. (PLTR), NXP Semiconductors NV (NXPI), Diamondback Energy Inc (FANG), American International Group Inc. (AIG), Illumina Inc. (ILMN), Hologic Inc. (HOLX), and Astera Labs Inc. (ALAB). These reports may provide further insights into the market’s direction after the election outcome is determined. As such the market remains in a holding pattern until the outcome concludes, before any further movement is likely to occur.
