Here’s What’s Going to Happen to Your 401(k) Tomorrow

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The race for the U.S. presidency has been a roller coaster of ups and downs. Now that American voters finally get to decide who will serve as the 45th president of the U.S., you might want to prepare yourself for another wild ride — this time in the stock market.

The Standard & Poor’s 500 stock index shook off a historic nine-day streak of losses Monday with a big rally, as gains were recorded in all the major stock market indexes including the Dow Jones Industrial Average and Nasdaq.

Market watchers speculated the rally was the result of Federal Bureau of Investigation Director James Comey’s announcement that the agency had completed a review of emails related to Hillary Clinton’s private server and found nothing new to warrant any charges against the presidential hopeful.

The S&P’s slump began when the FBI director sent a letter to congressional leaders Oct. 28 that additional emails of interest might have been found during an unrelated criminal investigation. Comey sent another letter over the weekend to Congress stating that no evidence had been found to change his previous conclusion that Clinton should face no charges over her handling of classified information while secretary of state.

James Meyer, chief investment officer at Tower Bridge Advisors, tells MarketWatch:

“The rally is all about Clinton having a better chance of winning, though I don’t think the market is celebrating her policies so much as reflecting how markets, like many Americans, are fearful of the unknown that comes with [Donald] Trump.”

That opinion isn’t isolated. According to this roundup from CNBC, many Wall Street experts expect stocks to rise November 9th if Clinton wins and fall if Trump does. Some opinions condensed from that article, collected before yesterday’s massive rally:

  • JP Morgan: The market goes up 3 percent if Clinton wins, goes down if Trump wins.
  • Barclays: Stocks rise 3 percent if Clinton wins, fall 11 to 13 percent if Trump wins
  • Citibank: Stocks fall 5 percent if Trump wins

But regardless of which direction the election goes Tuesday and how that impacts market prices on Nov. 9, Bloomberg points out that day-after election moves “say nothing about annual returns.” So investors shouldn’t panic.

“In the 22 elections going back to 1928, the S&P 500 has fallen 15 times the day after polls close, for an average loss of 1.8 percent. Stocks reversed course and moved higher over the next 12 months in nine of those instances.”

In short, analysts say we should be prepared for short-term volatility in the market, especially if Trump wins. But the effects probably won’t be long-lasting. Washington, D.C., investor Michael Farr explains to The Washington Post:

“Market volatility is no reason to panic. It is a part of investing. If one doesn’t have the time frame to endure downturns, one should sell. Otherwise, all investors should always be prepared for unpleasantness along the road.”

What do you expect the stock market to do on Wednesday? Let us know in the comments below or on our Facebook page.

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