What the Election Signals for Markets

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The election is over, but the questions are piling up. There isn’t a winner, and we could be days away from settling who will win the White House. Still, it is looking like the economy will remain strong and there will be a divided Congress—both potential tailwinds for higher stock prices.

We don’t have a winner, but who won?

At the time we recorded the morning of November 4, a presidential winner had not been declared, but the market was still picking winners. The likelihood of a split Congress could be a tailwind for tech and healthcare. Less regulation for tech and potential competition in healthcare have both sectors up nicely after the election. We’ve liked both of these groups and continue to think they will be leaders.

Who lost?

There is a chance of a delayed stimulus plan, or likely a plan smaller than anticipated if there had been a Democratic blue wave. This means some of the cyclical value areas could pull back after the huge rally over the past two weeks. Additionally, yields have moved lower, which could impact financials—which like higher yields. We still like materials and industrials, but they may be due for a breather.

Don’t fight the calendar

Stocks hate uncertainty, and historically, once an election is out of the way, stocks have tended to do quite well. During an election year, November has been the best month of the year for the S&P 500 Index, with December the third best. 2020 may be quite unique though, as we don’t have a winner and there is some swirling uncertainty. Since the calendar turned to November, however, stocks have done quite well so far. A strong year-end rally may be likely.

Tune in now

Listen to the entire podcast to get the LPL strategists’ views and insights on current market trends in the US and global economies. To listen to previous podcasts go to Market Signals podcast. You can subscribe to Market Signals on iTunes, Google Play, or Spotify.

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IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth in the podcast may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. All indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

All index data is from FactSet.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This Research material was prepared by LPL Financial, LLC. 

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