Wall Street Went From Fear to FOMO in a Week Everything Rallied

No wonder stock bulls are taking a breather in Friday trading: An everything rally has taken over Wall Street this week even as the market action defies expectations heading into the U.S. election.

More than $4 trillion has been added to global equity markets since Monday, putting it on track for the third-biggest week of 2020.

It didn’t seem to matter if the asset was a haven or a risk bet, global or U.S., liquid or illiquid — investors poured cash into global markets with a force that hasn’t been seen in months.

Take a Bow Markets, You Won This Election (Week)

What started out on Monday as a rally on bets that Democrats would deliver a big post-election spending deal carried through Thursday, even as it became clearer that Republican hawks are likely to keep control of the Senate.

The week stands as another example of how the equities market has been able to stay bullish despite news that many considered bearish. Before the election, some strategists said a split Congress and Democratic President would endanger the rally. In the end, it didn’t seem to matter as investors focused on further monetary support to battle the pandemic.

“We have the 800-pound gorilla, the Fed, with its mega footprint, helping to de-politicize in the market and serving as a constant reminder that they are the omnipresent back-stop,” said Gregory Perdon, chief investment officer at Arbuthnot Latham.

Investors focused on the benefits of legislative gridlock, predictable U.S. policy and lower real yields for the foreseeable future. The risk-on backdrop triggered a selloff in the dollar, which acted like fuel to commodities and emerging markets with the latter said to benefit from more stable U.S.-China trade relations.

In equities, the gains mean that the S&P 500 is back to the same place as a month ago. Now with the U.S. election drawing to a close, attention will inevitably shift to the on-again, off-again stimulus talks and race to find a vaccine.

Here are a few statistics from this week:

  • Nikkei 225 Index rose 5.9% and closed at the highest level in 39 years.
  • Treasury 10-year yields dropped 9 basis points to 0.77%
  • West Texas Intermediate jumped 6%, its best rally in a month, and gold had its strongest gain since July
  • Bloomberg Galaxy Crypto Index gained 15%, the most since July

— With assistance by Anchalee Worrachate, and Justina Lee

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