On Monday, the Nasdaq index had its best day since April. The rising odds of a clear victory for Joe Biden and a Democratic blue wave (see cover story) have raised hopes of a post-election stimulus binge.
The new mood is especially evident in the Vix index, the “so-called stock market fear gauge”, says Randall Forsyth in Barron’s. It has retreated below 25 from almost 30 earlier this month. That comes despite the fact that Biden is proposing a rise in capital-gains tax. JPMorgan strategist Nikolaos Panigirtzoglou notes that previous hikes in 1986 and 2012 delivered a roughly 5% hit to American stocks.
Perhaps even more surprising, tech stocks are once again leading the rally in the face of intensifying antitrust pressure, says John Authers on Bloomberg. Apple shares were up by 6.35% on Monday. The tech stock surge in August was accompanied by rising demand for call options, a sign that investors are making big leveraged bets on the sector. That period was followed by a sharp pullback in tech the following month. Now, once again, options activity is on the rise.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
US investors also have the start of the third quarter earnings season to keep an eye on, says Russ Mould of AJ Bell. The expectation is that the second quarter was the bottom for corporate earnings. Analysts are forecasting an 18% quarter-on-quarter rise in earnings per share.
That would still leave S&P 500 earnings 21% lower than this time last year but would suggest that things are going in the right direction. Yet on a cyclically adjusted price/earnings (Cape) ratio of more than 30, S&P 500 shares are very expensive, so the long-term outlook is uninspiring.
-
8 of the best houses for sale with outdoor swimming poolsThe best houses for sale with outdoor swimming pools – from a family house in Wimbledon Village, London, to a 1640s mansion in Derbyshire with a heated swimming pool in the grounds
-
Trouble brews in B&M as bargain shops take a hitOpinion Once a stock market darling, B&M's share price has slumped. What has gone wrong for bargain shops?
-
US and China reach a ceasefire in their trade war after talks in LondonThe US and China's trading relationship – the most important one in the global economy – is back on track. Will the truce last?
-
Infrastructure investing: a haven of stable growth amid market turmoilFrom booming construction in emerging markets to digital and green transitions, the infrastructure sector offers security, returns and long-term opportunities
-
The costly myth of “sell in May”Opinion May 2025's strong returns for US stocks have once again shown that putting too much weight on seasonal patterns will only make investors poorer, says Max King
-
Who’s driving Tesla?As Elon Musk steps back from government with his eyes on the stars, investors ask if he’s still behind the wheel at his electric-car maker.
-
Investment opportunities in the world of Coca-ColaThere is far more to Coca-Cola than just one giant firm. The companies that bottle and distribute the ubiquitous soft drink are promising investments in their own right.
-
Streaming services are the new magic money tree for investors – but for how long?Opinion Streaming services are in full bloom and laden with profits, but beware – winter is coming, warns Matthew Lynn
-
'Pension funds shouldn't be pushed into private equity sector'Opinion The private-equity party is over, so don't push pension funds into the sector, says Merryn Somerset Webb.
-
Greg Abel: Warren Buffett’s heir takes the throneGreg Abel is considered a safe pair of hands as he takes centre stage at Berkshire Hathaway. But he arrives after one of the hardest acts to follow in investment history, Warren Buffett. Can he thrive?
