U.S. stocks skidded lower on the week ahead of U.S. elections on Tuesday, Nov. 8. Investors fretted about a presidential race whose outcome appears much tighter than previously thought, raising the odds of a contest with no clear winner. The major indexes fell 2% in mostly uninspired trading.

For the past two weeks, there has been growing market fear of a victory by Republican candidate Donald Trump, whose antitrade and anti-immigration policies are anathema to capital markets.

Lost in the electoral anxiety were third-quarter earnings reports that were generally good, albeit against lowered expectations. Also ignored was the FED’s decision to wait to raise interest rates.

Last week, the Dow Jones Industrial Average fell 273 points, or 1.5%, to 17,888.28; it has fallen for seven straight sessions. The S&P 500 fell 41, to 2085.18, and is down nine consecutive days. The Nasdaq Composite gave up 2.8%, to 5046.37.

Sentiment is hanging on the election, says Mark Heppenstall, chief investment officer at Penn Mutual Asset Management. It has worsened in the face of recent polls suggesting that the verdict will be very close or potentially disputed.

The market wants a Clinton victory with Republicans holding on to Congress to rein in Democratic spending. However, “if there’s no clear winner, that’s a problem,” says Heppenstall. And there’s a “unanimous” view in the market that if Trump wins, the market will be in trouble.

After the surprise United Kingdom vote in June to exit the European Union, investors are hypervigilant about an unexpected outcome, says Jake Dollarhide, CEO of Longbow Asset Management. A Trump victory would lead to weeks of heavy volatility and seesaw action, he adds.

For the investor with the longer view, there’s some solace from past performance: the November-to-April period has been the best time to be in stocks over history.

(Source: Barrons Online)