Thursday, October 27, 2016

In Run-Up To Election, Markets Remain Shaky

As outlined in yesterday's post, US stock indices have been down since the beginning of August, presaging to the positive for the challenger party in the presidential election race.

While the outcome of a Trump victory is far from certain, what is clear is that traders and speculators are taking note of the fragile condition of the US and global economies, both of which have been side-stepping into the future since the crash of 2008-09.

Markets function largely on faith and hope, despair and confusion, greed and fear, and there seems to be ample supplies of all emotions all around. Puzzling analysts is how exactly a Clinton presidency would benefit markets, if only to keep the controlling interests in charge for another four years.

That may not be the best of circumstances, as Mr. Trump points out, because the global condition is quite completely on edge politically and likely over the edge financially. Nation-states are overburdened in debt, which has found its way back to the minions, a cause for unrest and potentially explosive social events.

With all that in the marco view, US companies, in the midst of third quarter earnings season, are, as has been the case for the past three years, struggling to find profits and any reason to be upbeat for the remainder of 2016 and into 2017.

There seems to be a dull thud re-occurring in the offices of CFOs and CEOs, that being the repeating sound of falling EPS and missed revenue figures, a double whammy for investors, though not many have fled the market as of this writing.

Thursday represents perhaps the biggest day of earnings season. Alphabet (GOOG), (AMZN), LinkedIn (LNKD) and Baidu (BIDU) are among companies set to report after the bell. Colgate-Palmolive (CL), Bristol-Meyers Squibb (BMY), Ford (F) and UPS (UPS) all report prior to the opening bell.

These results and some economic data (durable goods, pending home sales) will shape the day's trading. With just two days left in October, there's a slim chance that markets could rally back to positive for the past three months, which would be a good omen for the Hillary camp, but it is unlikely to happen unless some major news breaks that would spur a buying panic. It's happened before, but expect more oddities prior to election day next week.

Wednesday's Final Score:
Dow Jones Industrial Average
18,199.33, +30.06 (0.17%)

5,250.27, -33.13 (-0.63%)

S&P 500
2,139.43, -3.73 (-0.17%)

NYSE Composite
10,528.19, -22.00 (-0.21%)

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