- The Dow Jones, S&P 500, and Nasdaq edged sideways on Wednesday.
- Despite believing that a Trump loss in 2020 would cripple the stock market, Wall Street ignored Nov. 5 *** electoral losses in key Republican strongholds.
- Democrats won the governor’s mansion in Kentucky, as well as both houses of the Virginia General Assembly.
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The Dow Jones remained little changed on Wednesday, holding near record highs even after backlash to President Donald Trump helped propel Democrats to statewide victories in crucial Republican strongholds.
Wall Street analysts generally believe a Democratic presidential victory next year would knock the wind out of the stock market’s sails. However, investors appear to be disregarding the impact of Tuesday’s results on next year elections.
Dow, S&P 500, and Nasdaq Cling to Record Highs
The US stock market’s three major indices opened to slim losses. The Dow Jones Industrial Averagesought to secure its fourth straight advance, but the index dipped 37. 71 points or 0. 14% to 27, 454. 92.
The S&P (added to Tuesday’s 0.) % pullback, declining another 3. 43 points or 0. (% to 3.0) . 19.
The Nasdaq underperformed, falling 25. 98 points or 0. 31% to 8, 408. 7.
A softer US dollar helped precious metals recover from Tuesday’s slide, though thegold pricecontinues to trade below the $ 1, 500 mark.
2019 Elections Send Trump a Warning, But Wall Street’s Not Listening
As the 2020 US elections inch closer, Wall Street’s focus will increasingly turn toward the presidential race.
Precise forecasts vary, but there’s a strong consensus that a Trump victory couldreinvigorate the stock market, sending the Dow and S&P 500 further into record territory. On the other hand, Wall Street seems tofear an Elizabeth Warren presidency.
Ahandful of US states held off- year elections on Nov. 5, providing analysts with a final glimpse at how Trump’s presidency has transformed the electoral map.
Unfortunately for Trump, the results did not trend in his favor.
The Democrats successfullyflipped the state legislature in Virginia, giving them unified control of a purple state that voted for Hillary Clinton in 2016 by a margin of more than 5%.
In Kentucky, incumbent Republican Governor Matt Bevinlost the gubernatorial election to Democrat Andy Beshearby a margin of around 5, 000 votes. That result was a clear upset, given that Bevin won the Governor’s Mansion by 9% in 2016. Republicans swept the remainder of Kentucky’s statewide races, but on-the-ground campaigning from Trump and Vice President Mike Pence failed to push the unpopular Bevin over the line.
While the outcomes in Virginia and Kentucky were perhaps embarrassing to Trump, political analysts were quick towarn against reading too much into Tuesday’s results. With just four states holding off-year elections, the sample size is too small to draw valid conclusions about the state of Trump’s reelection prospects.
As Jonathan Bernstein, a Bloomberg Opinion columnist and former political science professor, wrote this morning,
“It’s not unusual for out-parties to win big in midterms and other off-year elections, only to see the president’s party recover and retain the White House. To the extent that the Democrats did well, they may have been helped by Republican weakness. But that doesn’t tell us anything new about how the party will perform next fall. ”
Consequently, while the 2019 elections weren’t spectacular victories for Trump, they also weren’t necessarily portentous.
US Productivity Declines, Recession Risk Ticks Lower
On the data front,US productivity unexpectedly declined by 0.3%during the third quarter, compared to an estimated increase of 0.9%. That was the biggest decline in productivity since 2015. Productivity is inversely correlated to labor inflation, with consumers ultimately footing the bill for increased labor costs.
According tonew data from Bloomberg Economics, there is a 26% chance that a recession bites the US within the next 12 months. That’s a slight decline from last month’s 27% reading.
Click here for a live Dow Jones Industrial Average chart.
This article was edited by Sam Bourgi.
Last modified : November 6, 2019 14: 48UTC
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