Even after Friday’s slide, the Dow and S&P 500 are still on track for about a 7% gain this week — the best since June. The Nasdaq has rallied more than 8% in the past five days.
Another financial aid package is clearly needed given that the unemployment rate, despite dropping dramatically last month, still remains at an elevated level of 6.9%. That’s down from 7.9% in September — but sharply elevated from the 3.5% level in February before Covid-19 ground the US economy to a virtual standstill.
The government reported the latest jobs figures Friday morning and said 638,000 jobs were added last month — more than expected.
“There is still a fair amount of uncertainty about the economy,” said Dan Eye, head of asset allocation and equity research with Fort Pitt Capital Group. “The Fed may even need to step up and do even more.”
In other words, the old “gridlock is good for Wall Street” narrative is alive and well.
“The market had made a half-hearted attempt of pricing in a blue wave,” said Timothy Chubb, chief investment officer with Girard.
“But if we have a split Congress and a potential President-elect Biden is not able to move forward with more substantial health care and tax reform, the market will ultimately see that as a positive,” Chubb added.
Still, there are concerns that a divided government could mean that Congress won’t wind up passing a big infrastructure spending bill — something that investors have been hoping for since Hillary Clinton and Trump squared off for the presidency four years ago.
“A blue wave would have been more beneficial because it would jave led to even more stimulus spending and higher economic and earnings growth,” said Steve Rick, chief economist at CUNA Mutual Group.
Lynch will become the 40th woman leading a Fortune 500 company.
Steve Rick, Chief Economist at CUNA Mutual Group,