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It looks like voters aren’t the only ones predicting change as the presidential election voting kicks off. Wall Street, for it’s part, is also enjoying an election day rally today, looking past the recent economic data that’s been a bit doom and gloom and hoping to put the uncertainty of the upcoming election behind them. At present, the Dow is up about 300 points, and other indexes are up over 2 percent.
Of course, judging by recent volatility, it’s still much too early in the day to decide whether this rally has legs. I’m also curious to find out how the markets will react to the winner of the presidential election. Although historically speaking Democrats are better for the economy in the long term, Democrating nominees tend to cause downturns in the short term in the market, likely due to the fear of increased regulation and government intervention. Although given the current slew of government take overs and bailouts, I’m sure that’s a muted fear at this point.
Some analysts, like Matt King, chief investment officer of Bell Investment Advisors, sounded particularly optimistic:
“It’s pretty typical of how bear markets end, “The stock market recovers well ahead of the economy.”
Let’s hope so.
One of the biggest blows to the stock market of late have been related to the drop off in consumer spending, which drives a good portion of the growth of the economy. Unfortunately in recent years much of consumer spending has been driven by debt, with credit card balances and other types of credit constantly on the rise.
If you happen to be one such consumer who’s running into debt troubles, you’re not alone, and there are solutions out there. There are a number of debt consolidation services that will help negotiate with creditors and organize your payments into a manageable sum each month. Debt counseling is an important service for consumers that are hitting the end of the rope as the easy credit era is rapidly coming to an end.
There’s no question that today’s markets are skittish at best and horribly irrational at worst. Every bit of doom and gloom news sends investors running for the exits even as money poured in just a day before. As a result we’ve seen huge swings day in and day out, and the couple hundred point drop we’ve seen in the Dow so far today seems par for the course given the past few weeks.
Today’s stampede for the exits is due to retail sales data, which came out much worse than expected. It’s not just investors who are scared, everyone is. As a result we’re much less likely to step up and purchase anything. From getting an auto insurance quote to putting a recent purchase on a credit card, we simply don’t have the spending capacity that we used to, and I believe that will reflect upon the upcoming holiday season as well.