US stock market braces for rocky week ahead of contentious US election

NEW YORK: Wall Street faces a rocky run-up to Election Day, with mounting worries about the outcome in Washington adding to nerves about the coronavirus pandemic and fading chances of stimulus.

Investors have been betting on a win by Democratic challenger Joe Biden by buying alternative energy shares and cannabis stocks, which are expected to benefit from his policy proposals. Bond yields have climbed, partly in anticipation of greater stimulus under a Biden administration. Before Monday, investors appeared to be dialing back on election-related volatility bets on the expectation of a clean win. As stocks fell, however, VIX futures rose along with the volatility index.Now market watchers worry that an unexpected victory by President Donald Trump, a Republican, or an uncertain election outcome could force drastic unwinding of positions similar to what occurred in 2016, when investors were overwhelmingly positioned for a Hillary Clinton presidency.

A surprise victory by Trump could lead to a post-election jump similar to that in 2016 https://www.reuters.com/article/us-usa-stocks/wall-street-surges-after-trump-wins-white-house-idUSKBN1332TA, when a rally in drugmakers and financial companies helped reverse deep overnight losses and pushed the S&P 500 up more than 1per cent, the start of a surge through the end of the year.

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