Dow Futures Slump as Trump’s Re-Election Odds Crash to Dismal 14%


Dow Futures Slump as Trump’s Re-Election Odds Crash to Dismal 14%
  • Dow Jones Industrial Average (DJIA) futures collapsed in early trading Wednesday.
  • A New York Times poll puts Biden 14 points clear of Trump in the 2020 election campaign.
  • Financial advisors warn clients of a ‘blue sweep’ in November.

Traders are beginning to price in the possibility of a ‘blue sweep’ as Republicans face losing the White House and the Senate this November. Dow Jones Industrial Average (DJIA) futures slumped 300 points in early trading Wednesday as dire numbers come in for the Trump re-election campaign.

According to an Economist model, Trump has a mere 14% chance of retaking the White House. The model puts Democrat candidate Joe Biden at an 86% chance of winning.

14 point lead over President Trump.

prepare for the blue sweep. In a note to investors, the firm wrote:

As Joe Biden’s lead over Trump in national and battleground polling has widened, several Senate races have become closer. We are changing our call and now predict the Democrats will take the Senate.

Dow futures crumble on NYTimes numbers

Dow futures tracked lower overnight, then collapsed early morning as the New York Times poll was revealed. At 5.27am ET, futures were down 336 points (1.29%).

S&P 500 futures were down 0.7% while Nasdaq Composite futures held stronger at -0.36%. The tech-heavy index hit a new intraday high in yesterday’s session.

Trump’s fading grip on White House spooks investors

It’s no secret that Wall Street tends to favor a Republican president. Back in early February, the stock market rallied near all-time highs as Trump looked unbeatable. No doubt, the president’s commitment to deregulation and tax cuts helped push the stock market higher during his tenure.

Then the pandemic happened.

Millions are now unemployed and the economy is on life support. Many disapprove of how Trump handled the health crisis. Even Republicans. Former Marco Rubio advisor Alex Conant said:

The last couple of weeks were among the worst stretches for any president ever.

approval rating has slumped since March and direct polling puts him way behind Biden.

The Economist data is particularly dire, predicting Trump will losing the key battleground states of Florida, Pennsylvania, and Michigan. Those are states in which he beat Clinton in 2016. The Economist estimates are based on polling data, as well as economic and demographic figures.

Expect Dow Jones volatility going into the election

The election cycle is likely to inject more volatility into the stock markets going into November. But that could ultimately open up some buying opportunities for long-term investors. Speaking to CNBC, Shannon Saccocia at Boston Private Wealth CIO explained:

If you think about what could happen between here and the November elections, there probably are going to be several opportunities to add to your equities position.

She went on to say there is “no way” equity markets won’t move higher, given the sheer volume of monetary and fiscal stimulus.

And while these shock poll numbers might spook traders for a day or two, money managers are probably comfortable with a Biden presidency. Back in January, Wall Street was certainly nervous about Elizabeth Warren or Bernie Sanders in the White House. But they were neutral on Biden – the moderate candidate.

Keep your eye on hedge fund flows

One more thing to watch this morning: hedge fund inflows are coming back.

$44 billion was yanked from hedge funds in March and April as panic swept the market. But new data shows that May saw the first uptick. Hedge funds saw $1.7 billion inflows last month in a sign that investors are coming back in from the sidelines.

That isn’t the whole picture though. Barclays predicts billions will be pulled from hedge funds before the year is out as volatility continues to plague the markets. Bloomberg’s Dani Burger reported this morning:

[Barclays] think $100 billion is going to be pulled from hedge funds for 2020. This is financial crisis levels. This is investors really turning away from the industry with so many wanting liquidity.

Elsewhere today, investors will be grappling with increasingly large outbreak numbers in states like Texas, Arizona, and Florida. Health experts say these regions should consider pausing their re-opening efforts.

This article was edited by Samburaj Das for If you see a breach of our Code of Ethics or Rights and Duties of the Editor, or find a factual, spelling, or grammar error, please add a comment below or contact us and we will look at it as soon as possible.

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