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Major stock indexes on Wall Street closed lower Tuesday, giving back some of their recent gains as traders returned from a long holiday weekend.
The S&P 500 fell 0.4%, while the Nasdaq composite slipped 0.1%. Both indexes were coming off their second weekly gain. The Dow Jones Industrial Average lost 0.6%.
A street sign is seen June 14, 2022, in front of the New York Stock Exchange.
The selling was widespread, with decliners outnumbering advancers by more than 3 to 1 on the New York Stock Exchange.
Losses in industrial, health care and financial stocks were the biggest drag on the benchmark S&P 500. Technology stocks were the biggest bright spot.
Energy stocks rose along with crude oil prices after Saudi Arabia and Russia said they will extend their voluntary production cut of 1 million barrels of oil a day through the end of the year. U.S. crude oil prices rose 1.3% and Chevron rose 1.3%.
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Smaller company stocks also lost ground, sending the Russell 2000 index 2.1% lower.
The yield on the 10-year Treasury rose to 4.27% from 4.18% late Friday. The yield on the 2-year Treasury rose to 4.96% from 4.88%.
Coming off the Labor Day holiday, investors have few economic reports to look forward to this week, while the latest round of corporate earnings is essentially finished.
The Institute for Supply Management releases its latest report on the U.S. services sector Wednesday. The services sector employs the most Americans and is a big component of the economy. Its health could provide more insight into how inflation is affecting consumer spending.
Wall Street will also get updates on aspects of the manufacturing sector and consumer credit.
Last week, investors were busy reviewing a heavy load of economic data as they try to get a better picture of the economy. Much of the information fueled hopes that the Fed might moderate interest rate increases to fight inflation, which has been easing for months.
Wall Street expects the Fed to hold its benchmark interest rate steady at its next meeting in September, just as it did at its previous meeting. Investors are mostly betting that the central bank will maintain that pause through the rest of the year.
The central bank has raised its main interest rate aggressively since 2022 to the highest level since 2001. The goal has been to rein inflation back to the Fed’s target of 2%.
Analysts are still concerned about the potential for a recession, but those concerns have lessened as inflation cools and the economy remains resilient.
All told, the S&P 500 fell 18.94 points to 4,496.83 Tuesday. The Dow dropped 195.74 points to 34,641.97, and the Nasdaq slipped 10.86 points to 14,020.95. The Russell 2000 slid 40.38 points to 1,880.45.
The Strongest Post-Election Stock Markets in History
The Strongest Post-Election Stock Markets in History
Photo Credit: oneinchpunch / Shutterstock
The U.S. political landscape has become more polarized than ever before. In fact, a study of developed democracies around the world found that the political polarization trend in the U.S. is more dramatic than in any other country in the study. In the months prior to the 2020 election, the overwhelming majority of both Biden and Trump supporters responded that they would “be very concerned about the country’s direction” and believed that it would cause lasting harm to the U.S. if their opponent won. This amount of turmoil surrounding presidential elections not only influences Americans’ everyday decisions, but the volatility can be seen in the U.S. stock market as well.
Voter turnout is the highest it has been in 120 years
As recent presidential elections have become increasingly contentious, certain issues facing Americans are coming into focus. The economy has always been a hot-button issue for American voters, but recent inflation and stock market volatility have made it an increasingly important concern. This is especially true for Republicans, who consider the economy the most important issue facing our country.
The combination of increased political polarization alongside a rocky economy has likely contributed to the record levels of voter turnout observed in recent years. Since bottoming out at just under 52% in 1996, voter turnout has steadily risen to nearly 67% during the 2020 election cycle. This level of civic engagement has not been seen since 1900—a sign of heightened voter focus.
Stock gains tend to even out over time
Despite increasing polarization around elections, one political party does not appear to have a significantly greater impact on the stock market than another. In the short term, the post-election stock market appears to slightly favor Republicans, with six out of the nine since 1932 producing positive two-week returns. This may be due to the fact that Republicans tend to favor less government regulation in business, and are often perceived to prioritize business and economic interests.
Over time, however, there is not a clear difference in the stock market when one political party is elected over another. In fact, there have only been five out of the 23 election cycles since 1932 that produced negative returns in the four years after election day. And of the five elections with the largest market price increases during the four years after election day, three were Democratic presidents—Franklin D. Roosevelt in 1932 and Bill Clinton in 1992 and 1996. Republican presidents Dwight D. Eisenhower (1952) and Ronald Reagan (1984) round out the top five.
To determine the strongest post-election stock markets in history, researchers at U.S. Money Reserve ranked post-presidential election stock markets from 1896 to 2020 according to the percentage change in the Dow Jones Industrial Average® stock market index two weeks after each election. In the event of a tie, the presidential election with the larger percentage change from election day to inauguration day was ranked higher.
Here are the strongest post-election stock markets in history.
15. 1916 presidential election
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