Markets Delay Big Moves Before Elections

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Alex Partida

Nov 07th 2022  .  4 min read

Markets Delay Big Moves Before Elections

This week marks another week full of market-moving catalysts, one of which only comes around every two years. Several market events will surely affect how price moves this week. The top things to be on the lookout for are the midterms on Tuesday, Consumer Price Index (CPI) report along with jobless claims on Thursday, and UMich Consumer sentiment to wrap up the week on Veterans day.

Election Day

Election day is the first catalyst of the week. Historically, the markets do better after the midterm elections than before them. In the meantime, big money on Wall Street will likely spend time shuffling around and getting positioned for any possible outcome that may transpire on Tuesday. Price action today indicated this, as most of the day was spent consolidating before ultimately making a higher move. A choppy and volatile environment on the night of the election would not be surprising. 

All eyes on Thursday

The week’s most significant catalyst will occur a couple of days later when the Consumer Price Index data is released on Thursday at 8:30 a.m. Eastern. The report expects data to show a 12-month change of 7.9%. These expectations would result in a 0.03% decrease from the previous report. Any number below 7.9% or below will hold the ability to send the market soaring higher. If the number comes in higher than expected and in the range of 8.0% and 8.2% will likely have a negative impact on the market. A disastrous outcome for the market would be a report that reveals anything above 8.2%; this would send ripples throughout the market.

While CPI is being released, the jobless claims will be announced simultaneously. This report has not impacted the market to the same degree as CPI, but the combination of data is sure to yield a reaction. The expected numbers of jobless claims are 219,000, an increase of 2,000 from the previous report. Any number significantly less than or greater than expected will add to the move of CPI. The general rule of thumb as of late has been any number close to the estimated number has had little impact on the market. 

Bank holiday to end the week

It is a bank holiday (Veterans Day) to close the week, which can contribute to how the market trades. Another thing to be aware of on a bank holiday is that if you are on a cash account, funds used in the previous session will not settle until Monday of the following week.

This week’s last report will be the University of Michigan (UMich) Consumer Sentiment Index. The University of Michigan holds this study to report the market sentiment from the consumer’s view by having at least 500 telephone interviews to sample the United States. Questions that are considered in this report are how a consumer feels about the current economy, personal finances, and business conditions. 

This report uses 100 as a baseline from 1985; anything less than 100 indicates the average consumer is less confident than in 1985. Optimism for the economy will be displayed by a number greater than 100. UMich has a forecast of 59.5 for the upcoming report.

The stock market starts the week positive

The Nasdaq and the S&P 500 were positive to close the session. The S&P 500 closed up 0.96%, gaining 36 points, while the Nasdaq closed up 0.85%, a gain of 88 points. The Dow followed, closing up 1.31%, adding 424 points.

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