Before The Bell - After slumping in September and then opening the often volatile, but usually rewarding, month of October in a solid recovery mode, the stock market has had some of the wind taken out of its sails during the past three sessions. The equity market, it would seem, has been rattled by a combination of factors.
To be sure, the damage has not been all that consequential, with this week's trio of setbacks being relatively modest in total. Still, the combination of rising COVID-19 infections stateside and increasing lockdowns in Europe, some disquieting economic metrics, and the pending election have pushed some investors to the exits.
Let's look at these issues. As for the coronavirus, concerns are mounting about a second wave, as outbreaks increase across much of this country. Then, there is the economy, where metrics are uneven in the aggregate with the employment situation seeing rising weekly jobless filings.
Then, there is the election, with a bitter contest under way and the possibility that no clear winner will be declared in the Presidential contest on election night. Finally, earnings season is upon us, and while forecasts are generally upbeat, results to date are somewhat mixed.
Taking all of this into account, and adding in some concerns about elevated valuations, it is not all that hard to see why investors have become a little more cautious in recent sessions. As for the latest session, stocks fell rather sharply at the open.
The immediate cause for the early selling seemed to be the continuing inability of Congress and the White House to agree on a new stimulus package, with the odds of a comprehensive deal being hammered out before Election Day now quite low. News of an unexpected jump in new jobless claims only made matters worse.
But after an initial loss of more than 300 points in the Dow Jones Industrial Average, the blue chip index managed to claw its way back until just before the close it went narrowly positive, only to ease back at the final bell to show a 20-point final deficit. The NASDAQ did a little worse.
Looking at things in their entirety, the stock market continues to show some resolve as investors look to the election and the likely need for more stimulus, with COVID-19 cases spiking again, jobless claims rising, and the possibility of further lockdowns.
Finally, a new trading day is about to get under way, and at this time the equity futures are poised to open the session with modest improvement, just one day after the nation reported its highest new COVID-19 case load since July. - Harvey S. Katz, CFA