The major indexes were down in the early session Friday, but were poised for a gain to end a midterm election week that saw stocks rally after a healthy dose of volatility in October.
The Dow Jones Industrial Average fell over 100 points, while the S&P 500 and Nasdaq Composite lost 20 points and 90 points, respectively, as of 10:45 a.m. ET. Nonetheless, through the close of Thursday’s trading session, the Dow was up 3.1% as was the S&P 500, while the Nasdaq gained 2.4%.
The markets were spurred on via a midterm election rally, which resulted in the Democrats regaining majority in the House of Representatives, while the Republicans maintained control of the Senate. The general consensus among analysts is that a divided Congress will create political gridlock, which typically benefits the capital markets. In addition, a split Congress could help damper U.S. President Donald Trump’s tariff-for-tariff battle with China.
Barring major declines through the market close, the indexes should end the week up, which investors will welcome with open arms. October will be a memorable month for stocks, which were racked by swings of volatility after an extended bull run the last 10 years.
However, some market experts are hesitant to say that the coast is clear in terms of volatility.
“The mid-terms are behind us, and the market now faces its own big test,” said Frank Cappelleri, executive director at Instinet. “Another strong showing today would unleash some bullish technicals. … While we can’t deny this, a straight shot back to the highs still seems unlikely, as volatility historically persists for longer than a few weeks.”
Dragging the indexes down on Friday was the price of oil tumbling behind more supply as it fell further into a bear market, putting the hurt on producers and the energy sector in general.