If Thursday’s 5% drop in the Nasdaq and Friday's mid-morning further 4% decline make your stomach squirm, brace yourself. Investors expect more wild swings in the markets as the U.S presidential election nears.
Some market watchers say volatility will likely rise regardless of who wins the White House. Possible catalysts that’ll drive that turbulence: economic uncertainty sparked by the pandemic and the likelihood of a drawn-out count from an increase in mailed-in ballots. Add to that the pileup of positions in the stocks of a few tech titans that investors have amassed.
Wall Street’s fear gauge has climbed over the past two weeks, and, on Thursday, it spiked to its highest level in almost 10 weeks as stocks sank. And that gauge rose further Friday morning.
Keep in mind: Elections in recent years have powerfully impacted prices of assets. Trump’s surprise win four years ago drove violent swings in gold, the Mexican peso and stock futures.