4:10pm: Pre-election jitters
Stocks fell in a cautious session on Monday as investors braced for a pivotal week featuring the presidential election and a Federal Reserve policy decision.
The S&P 500 slipped 0.3% to 5,713 points, while the Nasdaq saw a similar drop to finish at 18,180. The Dow Jones led the declines, down about 250 points, or 0.6%, closing at 41,795.
3:20pm: S&P's track record following the election
Don't expect too much from the stock market over the next month, analysts at LPL Financial warn.
That's because if history is any indication, the S&P 500 has usually traded down marginally during the month following the election.
"Given the lack of volatility around policy implications from the election this time, and the strong year-to-date gains, we would put the odds of some weakness over the next few weeks as higher," LPL's .Jeffrey Buchbinder, Chief Equity Strategist and Adam Turnquist, Chief Technical Strategist for LPL Financial wrote.
Looking out longer term, the index has generated an average gain of 6.5% one year after elections, though with gains only slightly more likely than losses. Given high stock valuations, the potential for the economy to slow (but land softly), and the possiblity of tax increases in 2026, we think double-digit returns in 2025 might be difficult to achieve."
2:05pm: Too close to call
Analysts are still calling the election results "too close to call" ahead of Tuesday's presidential vote.
"US factory orders fell for a second month but the market seemed more interested in Thursday's US Fed rate decision at which another 25 bps rate cut is firmly priced in," IG's Axel Rudolph commented earlier.
"We don't need to tell you what is important next week, a Federal Reserve meeting hot on the heels of the US election is plenty to grapple with," analysts at UBS wrote.
"We expect that the FOMC will deliver a 25 bp cut next week, and the focus will be on potential statement changes and the press conference with Chair Powell. We expect he will be peppered with questions on the pace of cuts to come, potential for skips, and perhaps where rates will ultimately land. He will likely lean on data dependence, with the data guiding the decisions at meetings to come, but we suspect the timing and pace comments stick within the general direction of travel."
12:30pm: Market volatility looms as election day approaches
US stocks experienced a slight decline on Monday as investors prepared for significant upcoming events, including the presidential election and the Federal Reserve's policy decision.
By noon, the S&P 500 and Nasdaq Composite had both fallen 0.2%, while the Dow Jones Industrial Average dropped about 200 points, or 0.5%.
Despite a strong earnings season and optimism about potential interest rate cuts, the market remains cautious ahead of Tuesday's election, which could lead to increased volatility. Additionally, the Fed's policy meeting will begin on Wednesday, with expectations of a 0.25% rate cut on Thursday, though the outlook for future cuts has been revised, with the market anticipating three fewer cuts by the end of 2025 than previously thought.
11:15am: Economic stakes
As the election looms and the Federal Reserve prepares for a key monetary policy meeting, Deutsche Bank analysts highlighted the potential economic implications of these events amid a backdrop of mixed labor market signals.
Current polling shows a tight race between Vice President Harris and former President Trump, with the median margin of victory in critical states being just 1.25 percentage points. The implications of the election outcome extend to potential shifts in fiscal policy, trade, and regulations, which could affect economic growth and financial markets.
On the monetary policy front, the FOMC is expected to announce a 25 basis point rate cut, as part of a broader strategy to recalibrate to a lower inflation environment. While the cut is anticipated to have broad support, future decisions may depend more on incoming data.
The week also includes key economic reports, including the ISM Services Index and jobless claims, though previous labor market data has shown mixed signals, with adverse weather impacting employment figures. Despite this, the overall outlook for the labor market remains solid, and Chair Powell aims to reassure markets that the economy is stable while emphasizing the Fed's data-driven approach to future policy decisions.
10.02am: Wall Street in cautious mood pre-election
Wall Street appeared in a cautious mood ahead of Tuesday’s presidential election as trading got underway for the week.
The Dow Jones dipped 0.3% as the market opened on Monday, while the Nasdaq fell 0.2% and the S&P 500 sat just off the mark.
A swing in the polls marginally favouring victory for Kamala Harris prompted traders to reassess positions on Monday ahead of the election.
Bonds rallied as a result, with the yield on 10-year treasuries remaining 10 basis points lower at 4.28% as New York opened.
The dollar faced a selloff in the meantime, falling 0.33% against the pound and placing the greenback on course for its worst day in six weeks.
“Recent polls had pointed to a Trump victory, casting a shadow over market sentiment,” City Index analyst Fawad Razaqzada said.
“Given the high risk that this could still be the case, investors are considering how such an outcome might impact fiscal policy, with some expecting increased spending and tax cuts that could exacerbate inflation pressures.”
7.23am: Stocks seen higher
Wall Street looked on course for a positive start to the week which will see either Kamala Harris or Donald Trump emerge victorious in the US presidential election.
Futures had the S&P 500 up 0.2% ahead of Monday’s opening bell, while the Nasdaq and Dow Jones were seen 0.1% higher respectively.
Latest polling showed Democratic candidate Harris inching ahead with an 8% lead in early voting ahead of the election on Tuesday.
Trump remained ahead among those likely to vote but had not yet done so in the meantime, according to the New York Times and Siena College poll.
“Coming at a time when markets appeared to have taken a Trump victory as a given, the polls are a timely reminder that betting markets may not be the best indication,” Scope Market analyst Joshua Mahony commented.
Bonds have rallied on Monday as a result of the latest swing in the polls, with yields on 10-year US treasuries down 10 basis points at 4.28%.
“What you’re seeing now is a realisation that we got ahead of ourselves,” UniCredit economics advisor Erik Nielsen added.
The former president’s Trump Media & Technology Group Corp (NASDAQ:DJT) also fell 6.6% in pre-market trading on Monday in response to the latest polls.
Aside from the election, Thursday is set to see the Federal Reserve make its latest base interest rate call, with markets widely expecting a cut regardless of who is named president.