Stocks End Mixed Yesterday Ahead Of Today's Election Stocks closed mixed yesterday with the big three indexes (Dow, S&P 500 and Nasdaq) finishing in the red, while the small-cap Russell 2000 and the mid-cap S&P 400 were in the green with 0.40% and 0.29% respectively. Last Friday's Employment report was an interesting one. The weaker-than-expected numbers saw stocks bid up, as bad news appeared to be good news, since it underscores the need for another 25 basis point rate cut later in the week. Of course, bad news can't be good news forever. So next month's Employment report is going to need to be better, or else investors will no longer think of it as a convenient anomaly, but a warning sign of trouble ahead. For now, bad news was goods news. Earnings season continues. Yesterday, after the close, Palantir posted a positive EPS surprise of 11.1% and a positive sales surprise of 2.90%. That translated to a quarterly EPS growth rate of 42.9% vs. this time last year, and a sales growth of 30.0%. They also guided next quarter's revenue up 3.4% above the midpoint coming into. The stock was off -1.22% in the regular session before earnings, but soared roughly 13% in after-hours trade following their report. Today we'll hear from another 297 companies, including Thomson Reuters, Marathon Petroleum and Yum Brands to name a few. In other news yesterday, Factory Orders were off -0.5% m/m vs. last month's -0.8% and views for -0.5%. Today we'll get the International Trade in Goods and Services report, and the ISM Services Index. The main event today, however, not just for traders and investors, but the whole world, will be the Presidential election. Actually, the Presidency and control of Congress (House and Senate), is what everyone will be watching. One could argue that Congress might be even more important given they are the ones that pass legislation. While we may not know who wins the Oval Office today (although it's possible), we should have a good idea which way the House and Senate will go. Even though roughly half the country will be happy with the outcome, while the other half less so, investors should happy regardless, since election years are typically good for stocks (and we'll have another 2 months left to go following the election). Moreover, Q4 is typically the best quarter of the year for stocks. So there's that. Let's also not forget that stocks are driven by earnings. And the earnings outlook for the S&P 500 companies is on an upward trend of improvement with Q3'24 earnings expected to be up 4.4%; Q4'24 up 8.7%; Q1'25 up 11.3%; and Q2'25 up 12.9%. And, of course, interest rates are on the way down as well. Another bullish catalyst for stocks. There could be some shorter-term volatility following the election. But the mid-term and longer-term view for stocks looks positive regardless of who wins today. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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