The Virus vs. the 2020 Election

The stock market has been weak in recent days, which is leading to speculation as to what’s causing it. The battle in question: The Virus vs. the 2020 Election.

Election uncertainty has been front-and-center on the minds of investors for months now. As the race invariably tightens as we get closer to election day, such uncertainty is only increasing. This week has been particularly rough on the stock market, with the S&P 500 dropping 3.5% on October 28.

However, our view is that renewed uncertainty about the spread of the Coronavirus is the key culprit affecting the market. In the last week, we’ve seen the number of new cases surge in both the U.S. and Western Europe.

Coronavirus Case Resurgence

The renewed uptick in COVID cases has led to fresh lockdown orders. Last week, Spain imposed new measures to close restaurants and bars. France imposed such stringent lockdowns this week that you actually need to get permission to leave your home! And right here in Illinois – where FDS is based – suburban Chicago restaurants and bars are banned from offering inside dining.

As if that’s not worrying enough, Washington has been unable to pass a second round of stimulus to business and individuals due to the upcoming election. How quickly such stimulus can get passed after the election is anyone’s guess. But the surge in cases shines a bright light on the failure to reach an agreement. 

Short-term vs. Long-term Impact on Investments

We always caution against getting worked up on short-term trends in the market. By their very nature stock markets are volatile and will go through periods like this. But like most things, having cable business news blaring scary headlines 24/7 during these moments makes them feel worse than they actually are. 

Our advice is simple: stick to your plan. Do your civic duty. Let the chips fall where they may and make adjustments as you have to. Our job as your financial advisor is to help guide you through uncertainty so you make sound financial decisions. Good planning reduces future uncertainty!