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A Post-Election Stock Market Analysis

Have you been concerned about your stock portfolio in 2020? Amid the COVID-19 pandemic and the 2020 presidential election, investors are uncertain of the market’s activity during such an unprecedented time. If you are one of these investors, you aren’t alone. Though we can’t predict the stock market’s future, our advisors can shed some light on what we’ve seen so far following the close of Election Day 2020. Here’s what we’ve noticed so far.   

The Stock Market’s Performance Following Election Day 2020

With a tumultuous election this year, investors watched with white knuckles as the stock market fluctuated in the days leading up to November 3rd. Though the divided government has caused some volatility in the market, this trend is not at all unexpected and does not indicate what could lie ahead. 

The Dow Jones Closed on Its Second Best Election Day in History

History cannot tell us what will happen with the stock market; however, it can indicate possible trends. In the past, the market has experienced increased fluctuation leading up to Election Day, and this year was no different. Keeping with the traditional volatility, the Dow Jones Industrial Average suffered losses the week prior to the election. But, in stark contrast, it ended November 3rd, having had its second-best Election Day performance in history. Since that day, we’ve seen changes in the market but overall positive results. 

The Split Control of Congress May Calm Investors’ Worries

As of November 5th, the S&P 500 was on track for its best election week since 1932. When we analyze the effect that the election can have on the stock market, it’s important to remember that the President does not have full control over the U.S. economy. In fact, many experts speculate that the positive response in the market is not due to Wall Street’s favor of either party or presidential candidate. Rather, investors are relieved to see that neither party has a sweeping hold over Congress. With the division of power, the policy changes to come over the next four years will likely be gradual instead of extreme.

The Trump Administration’s Announcement for Transition of Power May Play A Factor

On November 24th, 2020, the Trump administration has announced its intent to authorize protocols for a transition of power, affecting the market significantly. This gesture marks a step toward the possibility of a Biden presidency and has sparked a positive effect on the market—with the Dow Jones Industrial Average up 450 points and its blue-chip index crossing 30,000 for the first time in history. This encouraging number indicates a healthy rebound of the market, as it was near 30,000 prior to the COVID-19 pandemic in January. Following the administration’s announcement, the S&P 500 and the Nasdaq were also up more than a percentage point. 

Talk with Your Advisor About Post-Election Day Investing

At Southwestern Investment Group, we aim to stay ahead of the trends, analyzing the market’s progress, and determining how that affects our clients’ investment portfolios. However, though the presidential election certainly affects the market, we’re in it for the long term. Our advisors build comprehensive financial strategies that are designed to minimize risk. We review your progress and invest according to your dream financial goals. 

If you have any concerns or questions about how the election results will affect your portfolio, please do not hesitate to reach out to an advisor near you to schedule a consultation.

Aren’t sure if there’s a Southwestern Investment Group advisor in your area? Visit our website’s “Find an Advisor” feature to search for an office in your area.

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