Back to top

Image: Shutterstock

Zacks Investment Ideas feature highlights: Delta Air Lines, Marriott International, Goldman Sachs, Ericsson and Splunk

Read MoreHide Full Article

For Immediate Release

Chicago, IL – November 4, 2020 – Today, Zacks Investment Ideas feature highlights Features: Delta Air Lines, Inc. (DAL - Free Report) , Marriott International, Inc. (MAR - Free Report) , The Goldman Sachs Group, Inc. (GS - Free Report) , Telefonaktiebolaget LM Ericsson (publ) (ERIC - Free Report) and Splunk Inc. (SPLK - Free Report) .

Election Day Rally Points to Opportunity

The public equity markets caught a bid on this historic election day. Despite economic uncertainty remaining unprecedentedly high, all the major indexes closed the day up 1.75% or more.

Investors & traders are putting some money back to work in the market's cyclical underperformers, with financials and industrials leading today's rally. Every sector, with the exception of energy, closed green.

The pandemic is hitting us with a second wave, but investors are betting on a 'Blue Wave' that would provide swift fiscal stimulus as state economies begin to shut down again.

The markets have been experiencing some pre-election jitters with swelling volatility since the beginning of September. Last week the S&P 500 chipped away over 5% of its value with investors & traders cautiously positioning their portfolios for the uncertainty ahead.

Investors have been raising their cash allocation, so there is a lot of money on the sidelines going into tonight's election. This cash is waiting for definitive answers on this election and the COVID stimulus front. This could cause an equity rush if the markets see what they are looking for tonight.

The Biggest Concern

The equity market's biggest fear today is that this election will be contested, and the "real winner" won't be conclusive for weeks. Investors just want this whole thing to be over.

A conclusive presidential winner, no matter who it is, would take uncertainty off the table. I believe the markets would be lifted by any decisive result this week.

Right now, it appears that neither candidate is going to take their loss without a fight. The odds of a contested election increases as the election results narrow.

A contested election would be the worst-case scenario for the stock market. This would keep uncertainty on the table, push stimulus talks further out, and potentially incite chaos in metropolitan cities across the US.

S&P 500 Levels to Watch

Today's rally was one of the strongest broader market upticks in election day history. The S&P 500 is still battling the notorious 3400 level (its February highs), which it has been interacting with since mid-August. Today, the S&P came up towards this level but couldn't break through it until we have some decisive information.

3400 is now a more robust resistance than ever, with the S&P 500's 50-day moving average providing another layer of obstruction. If this election bodes well for the stock market, look for an upside past 3400 towards its all-time highs at 3590.

On the downside, I am looking at support levels at 3200, 3125, and 2935.

What to Expect

An uncontested 'Blue Wave' would provide the market with a temporary but powerful sugar rush. This would likely mean a massive fiscal stimulus being passed swiftly (January – February timeframe). A democratic sweep's long-term implication might be a little more uncertain with this regime's anticipated tax and regulatory changes.

A Trump win would almost certainly not come with a 'Red Wave' (because the House is remaining blue), but there would be no sense in congress stalling any further on another fiscal stimulus to support the economy. Long-term implications may be more favorable for the stock market in the long run. Trump has been more attentive to the public markets than any other prior US President and will not let this 'report card' fail.

The best-case scenario for the markets is a decisive 'Purple Wave' with a divided government. This government divide would keep the current regulatory landscape unchanged. As I said, there is no more reason to stall fiscal stimulus, which the markets have been waiting on. No matter who is president there will be a vaccine on the market in the future.

Keeping the status quo is what the equity markets want, and they will get it with an uncontested divided government.

Keep in mind that winning the Senate majority will be almost just as critical as the presidential results for both parties. A Senate majority will be one of the deciding factors that dictate whether there is a Democratic sweep. The House of Representatives is expected to remain Blue.

Winners

If it is a decisive win, the winners coming out of this election will likely be the underperforming cyclical stocks like financials, utilities, airlines, and industrials. Fiscal stimulus is going to be pushed through once this election is behind us.

I like Delta, Marriott and Goldman Sachs as value plays, and Ericsson and Splunk for the 5G infrastructure build that is anticipated to see significant government support over the next 4 years.

Final Thoughts

Today's rally illustrates that cash-heavy investors don't want to be underexposed to some stocks that will benefit from this election's winners.

I expect the futures market and equity markets abroad to be extremely active this evening as preliminary results roll in throughout the night. I will be on the edge of my seat for the rest of the week as thrilling market action ensues. 

Legal Marijuana: An Investor’s Dream

Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.

Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.

Download Marijuana Moneymakers FREE >>

Follow us on Twitter:  https://twitter.com/ZacksResearch

Join us on Facebook:  https://www.facebook.com/ZacksInvestmentResearch

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

https://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.