Election Hangover: Traders Selling News of Obama’s Victory
There’s got to be a morning after, as the (not so fat) lady once sang. And the morning after Barack Obama’s sweeping election victory saw stocks sag in both Europe and the U.S.
At about 1 p.m. ET, the Dow, S&P and Nasdaq were each down about 3%.
Even partisan traders would tell you the market’s decline (so far) today has less to do with the election than with the approximately 18% rally that occurred in the prior six trading days.
By the same token, that “pre-election” rally likely had less to do with the election than with the market being oversold after a huge decline in September-October. Similarly, the big decline that preceded the recent rally wasn’t so much about fear of an Obama presidency as fear of a financial market meltdown.
The election’s biggest impact on the market is the removal of uncertainty over who the winner is and the balance of power in Congress. Now the focus turns back the economy and the financial crisis, where harsh realities remain in force judging by the latest headlines:
* Weaker-than-expected reports on services from the ISM and employment from ADP. * Steep production cuts by steel giant Arcelor Mittal amid slowing demand. * Overnight warnings from European banking giants UBS and Royal Bank of Scotland.
A big challenge for the stock market is that analysts’ expectations remain overly optimistic at year-over-year earnings growth of 29% in the fourth quarter and 15% in 2009, according to Barron’s.
Regardless of who’s in the White House, it’s unlikely the stock market will be able to sustain progress for any serious length of time until expectations get in line with reality.
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Election Hangover: Traders Selling News of Obama’s Victory
There’s got to be a morning after, as the (not so fat) lady once sang. And the morning after Barack Obama’s sweeping election victory saw stocks sag in both Europe and the U.S.
At about 1 p.m. ET, the Dow, S&P and Nasdaq were each down about 3%.
Even partisan traders would tell you the market’s decline (so far) today has less to do with the election than with the approximately 18% rally that occurred in the prior six trading days.
By the same token, that “pre-election” rally likely had less to do with the election than with the market being oversold after a huge decline in September-October. Similarly, the big decline that preceded the recent rally wasn’t so much about fear of an Obama presidency as fear of a financial market meltdown.
The election’s biggest impact on the market is the removal of uncertainty over who the winner is and the balance of power in Congress. Now the focus turns back the economy and the financial crisis, where harsh realities remain in force judging by the latest headlines:
* Weaker-than-expected reports on services from the ISM and employment from ADP.
* Steep production cuts by steel giant Arcelor Mittal amid slowing demand.
* Overnight warnings from European banking giants UBS and Royal Bank of Scotland.
A big challenge for the stock market is that analysts’ expectations remain overly optimistic at year-over-year earnings growth of 29% in the fourth quarter and 15% in 2009, according to Barron’s.
Regardless of who’s in the White House, it’s unlikely the stock market will be able to sustain progress for any serious length of time until expectations get in line with reality.
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