U.S Stocks post worst monthly drop since March

Blue-chip Dow just ended the month of October with a 4.6% loss, its worst monthly performance since March.

By Olumide Adesina

Global investors are hoping for better returns in the U.S stock markets, amid a plunge in returns recorded across its market spectrum.

What we know

The blue-chip Dow just ended the month of October with a 4.6% loss, marking its worst monthly performance since March. The S&P 500 and the Nasdaq dropped by 2.8% and 2.3% last month respectively – both suffering their second straight negative month.

The major stocks indexes had a bad showing in October, as seen coming off their worst week since March 20, as COVID-19 cases explode at an alarming rate, fiscal stimulus negotiations are torn apart, and shares of leading tech brands like Amazon and Apple dropped following their quarterly earnings reports.

What they are saying

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, gave further insights on the performance of U.S equities and how the upcoming U.S election would affect its volatility at least in the near term.

Risk reduction into the US election should allow asset prices to react more consistently with outcome-based scenarios after the event.

Last week, the S&P 500 (-5.6%) and front-month WTI (-10.2%) recorded their largest weekly declines since March. The underperformance of reflationary trades over the past week (lower industrial metal prices, EM equities, and a stronger USD) suggests improving risk: reward in these assets on a Democratic sweep of Congress.

What to expect

The US election will determine how much fiscal stimulus is possible and whether there will be a new trade war with China. Both the axes are pivotal to USD/Asia’s 2021 outlook.

Olumide Adesina

Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment Trading and Financial Market Analysis. Member of the Chartered Financial Analyst Society. You can follow Olumide on Twitter @tokunboadesina or email olumide.adesina@nairametrics.com.