By Mark DeCambre
Could the 2020 U.S. presidential election be the most highly wagered on event in history?
The Nov. 3 vote has tallied over $260 million in wagers thus far, according to Pete Watt, spokesman for OddsCheckerUS, during a Wednesday interview on “The Dan Abrams Show” on SiriusXM .
That means bets on the political race between President Donald Trump and former Vice President and Democratic challenger Joe Biden already have surpassed total wagers on high-profile sporting events, like the National Football League’s Super Bowls, the National Basketball Association finals, and big ticket boxing matches, Watt says.
But there are, gargantuan sums at stake on Wall Stree t too, and this coming week could represent the moment of truth for traders who have been rattled recently in the lead-up to the highly anticipated election.
The Dow closed 6.5% lower for the past week and the S&P 500 lost 5.6% over the same stretch, while the Nasdaq skittered 5.5% lower.
However, it isn’t just political agita that this week drove the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.29% , the S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.22% , and the Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.72% to register their worst weekly tumbles since March —there’s been a resurgence of the coronavirus pandemic too.
Traders this coming week confront the prospect in some U.S. states of a return to business shutdowns like those seen in March as COVID-19 cases rise to daily records.
Stephen Dover, head of equities at Franklin Templeton, put it this way: “This next week will be a confluence of market driving events: of course the election, stimulus, earnings and growing Covid infections.”
Key events of the coming week include the U.S. election results on Tuesday, an update from the Federal Reserve at its Wednesday and Thursday meeting, and the jobs report for October from the U.S. Labor Department on Friday.
“Next week is going to be a volatile week for the market given all the big events,” Lindsey Bell, chief investment strategist at Ally Invest, told MarketWatch.
Will Trump overcome betting odds and the opinion polls to stage a comeback in the electoral college against Biden as he did in 2016? Or will the Congressional races amount to a so-called blue wave in Washington, resulting in a Democratic sweep of both the White House and Congress that may usher in another broad fiscal relief package to combat the economic harm from the pandemic ?
“If the Democrats gain a strong majority in the Senate there is likely to be more legislation that will affect the markets and there will be sentiment shifts in many sectors of the market,” Franklin Templeton’s Dover explained.
Specifically, Dover thinks the congressional races could prove a source of jitters for markets into late November and beyond, pressuring stocks lower.
“It is likely that we will not know the final Senate results on Tuesday evening,” Dover told MarketWatch, while warning that uncertainty could “add to volatility in the market until resolved which, because of runoff races, might not be resolved until January.”
It is a point that can’t be overstated: the investment community hates the unknown.
Ally Invest’s Bell ranks the political race as the key issue next week, perhaps even above the second or third wave of COVID-19 cases in the U.S. and in major cities in Europe.
“I believe the election will be the key driver of next week’s action,” Bell said. “That’s because the election has the most consequential near-term and long-term implications for the market,” she said, while pointing out that investors will be looking to adjust their portfolios based on its outcome.