Midterm Election Fallout Triggers Market Selloff and Investor Uncertainty

0:00 Speaker 1 Well, with us today is John Terrett. Like every Sunday, give us an update on what the markets did last week.

0:07 Speaker 2 Well, as if you don’t know, yes, remember, remember the 5th of November. Do you know what that is? It’s an old rhyme from England. It comes from the era when the gunpowder plot, they tried to blow up the parliament houses in London in 1605. Well, now, remember, remember the 5th of November means something else on Wall Street.

0:24 We’ll never forget what happened last Thursday, will we? And, of course, it happened because the Democrats had that sweep in the midterms, taking the House and the Senate. But more importantly, from Wall Street’s perspective, lots and lots of down ballot races as well. So on Wednesday, Wall Street’s reaction was that the Dow was up by about 1500 points.

0:42 And that was because the election wasn’t contested. I think a lot of people thought we will be days, if not weeks, before we found out about some of the results. And that did not happen. But then on Thursday, we had the huge sell off. And that happened because of the Democratic sweep. It happened because there are so many

0:57 governors and state level politicians. This is the down ballot. comment I made just now. So many of them were elected to deliberately stop data centers being built all across the country. And the thing is, all this investment that’s gone into AI will be wasted if the data centers can’t be built. That’s the problem. So on Thursday, the

1:15 Dow was down 1,800 points, the Nasdaq down 1,400 points. I’m old enough to remember when the Nasdaq was only worth 1,400 points in total, never mind dropping 1,400 points. S & P 500 was down about 300 points. And then we got to Friday and things stabilized, of course, because the buyers moved in, because it’s a hell of

1:32 a buying opportunity. A lot of people on Wall Street saying, well, so what? You know, the Nasdaq was down 5%, but hey, it’s up 7% for the year so far. So let’s move in and buy some bargains, which is what happened, basically.

1:44 Company news earlier in the week, Apple gave us their earnings. Revenue was up 12%, not 16%, like it was last time around. So the stock was punished 10%. And advanced micro-devices sales up 45%. But, of course, that was before Thursday. Now, on Friday, we have the non-farmers’ jobs report. Way more than we thought. 165,000, not just 65,000, which was forecast.

2:06 Unemployment rate ticking down to 4.1%. That could be confusing for the Fed when they meet next in December. And in the week ahead, we’ve got inflation dominating. John, we’ll hear about CPI and PPI towards the end of the week.

2:19 And earnings come from two more big tech names– Cisco and Applied Materials. And the big unanswered question, of course, which we cannot answer now, will there be another tech sell-off next week? We’ll just have to wait and see.

2:30 Speaker 1 John? I think you’ll wait and see and see if everybody gets together and makes love instead of fighting.

2:38 Speaker 2 Indeed. I couldn’t have put it better myself.

2:40 Speaker 1 Thank you so much, and we’ll catch up. Thank you.