Friends

Wow. A Blue political wave last night turned into a green wave on Wall Street. Why did stocks go up today after a total drubbing of the Republicans by the Democrats? Well, the saying goes that the markets like certainty and last night’s results were so decisive there is no fear of challenges or dragged-out recounts or litigation. Also, political gridlock often is seen as a positive by market participants. Tariffs were not particularly popular among investors and perhaps the President will have to curb his enthusiasm along those lines. Of course, there’s the war (see today’s action in oil). I’m not sure anyone can handicap just what exactly will happen there. In addition, the President indicated that he would be willing to work with the Democrats on legislation. Finally, I saw statistics today that showed that seven times a Republican President has faced a Democratic Congress and on average the S&P 500 was up 17.5% six months later. Perhaps that doesn’t mean anything. Time will tell.

As for today, by the close the Dow Jones Industrial Average was up 1,569 points to finish the day at 53,356. The S&P 500 was up 119 points to close at 7,688. The Nasdaq Composite Index was up 364 points to close at 25,736. Gold was up $130 to trade at $4,070 per ounce, while oil was down $7.42 to trade at $88.67 per barrel WTI.

The knee-jerk reaction to last night’s political results were higher stock prices, lower bond yields, and lower oil prices. It will be interesting to see how things go over the coming days. We have a non-farm payroll jobs number on Friday. These are sure interesting times for the markets. Stay tuned.

Have a nice evening everyone.

Jim