A Final Campaign Rally

By Alex Eule |  Monday, November 2

Time to Vote. With more one chance to weigh in before the election, investors struck an optimistic note, a stark contrast to last week's selloff. The Dow Jones Industrial Average rose 423 points, or 1.6%, while the S&P 500 was up 1.2%.

Investors overlooked lockdowns in Europe -- U.K. Prime Minister Boris Johnson announced new restrictions over the weekend -- and seemed to be buoyed by one final piece of data from the manufacturing sector: The Institute for Supply Management's October manufacturing report showed a sixth straight month of growth in economic activity. A reading of 59.3 was the highest since September 2018. That helped boost more cyclical stocks, particularly those in the energy and materials sector, which were up 3.4% and 3.3%, respectively. Crude oil rose 2.8% on the day, to $36.81 a barrel. 

The lone losing sector was communication services, weighed down by losses for social media stocks (Twitter and Facebook) and cable companies (Charter Communications and Comcast). 

Norwegian Cruise Lines fell 2.8% after the company delayed the resumption of sailings by at least a month. Its suspension is now in place through Dec. 31. The decision follows Friday's announcement by the Centers for Disease Control that allowed cruises to resume as of Nov. 1, with significant caveats.  Shares of Norwegian and its rival Royal Caribbean had initially jumped on the CDC news. Today's announcement reflects the difficult spot travel companies continue to find themselves in, especially as European countries impose new lockdowns. 

It's possible that 36 hours from now we'll finally have some clarity around the election. Any kind of certainty could be good for markets, but it could also renew the focus on everything else. As election results roll in, it will be useful to think in terms of months, not hours or days.  Here's a good summary from Bob Doll, the chief equity strategist for Nuveen, on how he thinks the coming months will play out: 

The “easy” part of the recovery seems to be over, and we expect choppy economic data from here. The odds are high that we’ll see a sizable new fiscal stimulus package early next year, regardless of the election outcome. And we hope that medical advancements will spark more economic activity in the months ahead. While we expect more near-term economic and market turbulence, we think stock prices should climb over the next six to twelve months.