The Dow Jones Industrial Average jumped 700 points, or 2.6%. The S&P 500 traded 3.1% higher. The tech-heavy Nasdaq Composite popped 4.1%.
The market is higher as the blue wave that was forecasted did not materialize. However, proceed with caution there is volatility ahead. If you were thinking of reducing market risk now might not be a bad time to do so. My feeling is the worst case scenario for short term market volatility has played out. The President had a significant lead yesterday evening. The lead was big enough for him to feel comfortable claiming victory. However, his claims don’t seem to be supported by the vote count, as he is currently trailing in Michigan, Nevada and Wisconsin. If Biden takes those 3 states he will have won the election regardless of Pennsylvania. What that sets up for is a protracted fight and recounts in the most closely contested states. I don’t think today’s rally is properly considering that scenario. The next few weeks will be very volatile, I am NOT advising to get out of stocks. We will get through this election cycle and the market will be fine. What I would suggest for those who might be nervous about the weeks ahead. Take a look at your retirement account (401k, 457, TSP, IRA,etc.) and if you have had a large increase then take 5 to 10 percent of it and move it to the sidelines in something like a stable value fund or short term government bonds.
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