Scheduled for tonight: the first U.S. presidential debate between the two major party nominees Hillary Clinton (D) and Donald Trump (R). The debate will not include Libertarian Party candidate Gary Johnson nor Green Party candidate Jill Stein, both of whom failed to reach to 15% polling plateau that had been determined for inclusion in the debates.
In an election season that has notably defied predictions of a plethora of political experts, the contest appears very closely contested at this stage, with several “swing states” currently too difficult to predict. It would stand to reason that tonight’s debate may have some sway among enough undecideds or on-the-fencers to push the election cycle forward, with 6 weeks and a day to go before polls open.
Subjects such as U.S. economics, job growth and taxes will reportedly be discussed, but plenty of questions remain whether the real takeaways from tonight’s debate will be of a more personal nature. Trump’s entire strategy since announcing his long-shot candidacy a year and a half ago has been to deflect policy details in favor of politics of personality. Considering how far he has come since, it would be reasonable to say he’s done an expert job at it.
Setting aside whether or not policy-related Q&A will win tomorrow morning’s talking points, depending on the outcome we may see a shift in attitude among market participants. Until very recently, the market had been pricing in a clear victory for Clinton, who would presumably continue many policies from current Democratic President Obama. We saw the volatility index (VIX) way down as a result.
Over the past couple weeks we’ve seen an increase in volatility, and we expect this to swing even more wildly if tonight’s debate throws into uncertainty what analysts consider givens about this election. Specifically, if Trump can score major points tonight against Clinton, we expect to see a new level of volatility hit the stock market.
Currently, market futures are in negative territory a half hour before the opening bell. With no major economic news taking headlines this morning — though we look for Carnival Corp. CCL earnings and August new home sales reports, as well as an OPEC meeting today and tomorrow — the S&P 500 is down 10 points, the Dow down 100 and the Nasdaq -29 points.