US Stocks Slide Ahead of Presidential Election

U.S. stocks on Monday experienced a small slide ahead of the 2024 presidential election, but other markets are already moving more sharply.
U.S. stocks largely held steady, with the S&P 500 close to last month’s record. The Dow Jones fell by 135 points, or 0.3 percent, and the Nasdaq edged down by 0.1 percent.
Marriott International shares slipped by 3.1 percent following a weaker-than-expected quarterly earnings report. In contrast, Fox Corp. surged 3.9 percent after exceeding profit forecasts, a feat achieved even amid rising costs linked to the current election cycle’s newsgathering demands at Fox News.
The markets face a pivotal Election Day on Tuesday, in which Vice President Kamala Harris faces off with former President Donald Trump, but investors may need to brace for a drawn-out count, stirring concerns over prolonged uncertainty—a factor Wall Street traditionally dreads.
Historically, however, U.S. stock markets tend to rise regardless of the presidential victor. In the 2020 election, U.S. stocks rose immediately after Election Day and continued their upward climb even after Trump contested the results. Much of that post-election rally was also fueled by optimism over the impending COVID-19 vaccine that promised to revive a global economy brought to a standstill.
“Bottom line—the U.S. election is incredibly important, but the process is likely to be incredibly noisy,” Michael Zezas, a strategist at Morgan Stanley, told The Associated Press.
Zezas noted that prices might already reflect likely election outcomes with investors cautiously positioning for potential policy impacts. Should Trump secure a win, for example, tariffs on Mexican imports could return, but the Mexican peso has already taken a hit against the U.S. dollar in recent months, possibly limiting further declines should such policies materialize.
A Trump victory wouldn’t shock markets this time as it did in 2016, when Treasury yields spiked on hopes for tax cuts to fuel U.S. economic growth despite concerns over rising debt.
In recent weeks, Treasury yields have climbed again, partly in response to upbeat reports on economic resilience and hints from some market quarters betting on a Trump win. However, on Monday, yields retreated, with the 10-year Treasury yield falling to 4.27 percent from 4.38 percent last Friday.
Oil prices are spiking after Saudi Arabia and other key producers announced a delay in planned output increases. U.S. crude prices rose 2.6 percent to $71.29 per barrel, while Brent crude increased similarly to $74.98. Treasury yields, often a gauge of market sentiment, dropped with the 10-year Treasury yield dipping to 4.27 percent from 4.38 percent on Friday.
Beyond the U.S., China’s Standing Committee of the National People’s Congress is meeting this week, potentially signaling fiscal interventions to counter two quarters of sluggish growth. Meanwhile, the Federal Reserve is widely expected to reduce its main interest rate for a second consecutive time, a move markets are closely tracking.
With oil and Treasury yields reacting, investors are bracing for a tense week.
This article includes reporting from The Associated Press.