Dow Drops 650 Points Lower As Covid-19 Cases Reach Record Highs | NBC News NOW

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The Dow Jones Industrial Average closed 650 points lower, after dropping by more than 950 points. Caleb Silver, editor-in-chief at Investopedia, explains how it is linked to Covid-19 case surge and what is worrying investors. » Subscribe to NBC News: http://nbcnews.to/SubscribeToNBC » Watch more NB



Transcript
With covet cases shooting up across the country, the markets nose dive. Today, here's a live look at the dow, which is just about closing uh down 649 points. They'Re, basically erasing its gains for the month of october, caleb silver editor-in-chief of investopedia is here now caleb. This was a whole mess of a day. We had record coveted cases over the weekend, no relief deal yet on capitol hill. T ...
is was not a great combination for stocks. Let'S talk through what happened today on wall street and what investors and traders are really worried about here. Well, you, your last segments have really told the story, these spies and covet cases as everybody worried about another shutdown, another complete shutdown of the economy or a partial shutdown and we're just coming out of it into some kind of a recovery here. So having that thought of a double dip recession or another lockdown that could crimp economic growth, that is really put uh, the fear, uh and volatility back into the stock market. Oh yeah there's an election in around seven plus days and that's got people a little freaked out too, but today's sell-off seem very covered related because the sectors that sold offer all recovery uh related disney that the travel stocks, the airline stocks, financials energy stocks. All of those sectors that had been a part of this broad-based rally over the last three weeks, which was unusual for october, they all got sold off today and, as you mentioned, all of october's gains washed away in a sea of red yeah. You can see it caleb when you woke up this morning and looked at the markets.

Oh yeah, there's the impact of what happened over the weekend. Uh you mentioned it. We'Ve got an election coming up in eight days earlier in the year it really looked like wall street favored. President trump i mean before the pandemic. The markets had done very well under his presidency. They have largely bounced back since the start of covid. A big concern on wall street was that biden would rate tax would raise taxes on the wealthy and corporations that he would be a less favorable candidate for businesses, but we're seeing a shift here. Economists, from several of the big banks, including goldman, are now saying that biden could actually be good for stocks. What'S going on here, well they're, assuming that if biden gets elected and has the backing of the senate and what we call a blue wave, there will be a lot of spending. That'Ll be stimulus, spending that'll, be infrastructure. Spending and that'll be spending on the green economy. He'S been talking about so you'll get spending just not in the same places or in the tax breaks.

You'Ve got through the trump administration, but right now, uh, you've seen in the last few days, allison the the narrowing of the gap between the biden, favorable stocks and the trump variable stocks tighten a little bit as some polls of titan in some places and there's uncertainty That, even if biden is able to pull off a win, he will get the blue wave support from the senate. So caleb, let me ask you: if we look back historically, what is the best combination for stocks post-election? Do we want to see a democratic sweep, a republican sweep a split in government? What'S good for stocks, what's good for the markets? Well, everybody likes to think that the president, especially presidents like to think that they have a big impact on the stock market. They don't they need the backing of the senate, they need the backing of congress to get anything done. The best time to be president. The best returns have usually come after the biggest drawdown, so obama had great performance. In his first term, we were coming out of the great financial crisis. Uh reagan had pretty good performance. There was a lot of tax cuts in the 80s. We were coming out of a pretty big downturn in the 70s. It'S about the era and the makeup congress, and what they're able to do that really makes sense uh for investors where they can actually see the growth uh. You know in the in often to the horizon right now that growth, no matter who gets elected uh next week or however long it takes, is going to be clouded by the fact. This pandemic is still here and it is going to hold back economic recovery in a broad-based way.

That said, you could see that there have been sectors like cannabis, light green energy, like healthcare rallying as biden's polls improved over the last few weeks. The last few days, as i said, that's narrowed, i'm imagining we've got eight days to go. We'Ve got several trading days to go until the election. As you said, we may not have an answer on election day. I imagine we are going to see continued volatility until election day, especially if we have coveted cases on the rise. So what can people do? What should be? They be doing right now to protect themselves or be prepared. Whatever the outcome is next week, what should they be thinking about with their finances their portfolios, uh, especially as we had not just into the election but towards the end of the year? So in terms of personal finances, the number one thing is: do you have ample savings? We used to say three to six months now we're saying more like six to 12 months, because the future is super uncertain. So take care of that to make sure you have savings, if you can't or you don't have savings, you've got to find ways to tighten the budget. So you can have money set aside because there's going to be so many unpredictable factors in the next three. Two weeks in the next six months and the next year, so you got to make sure that's tight in terms of investing. If you didn't make moves this year, you're fine, we're basically where we were when we started the year even a little up. If you can believe that, so the stock market capital markets have rallied, if you were selling off in any of these downturns, when i've been on with you over the past six or seven months, you didn't know when to get back in.

You missed one of the greatest rallies of all time, so you can't time the market have your plan and stick to it. That said, if you're sitting on big gains - and you think that biden is going to win, you know higher taxes are coming. You don't know when, but they're coming, some people may want to take some money off the table. We'Ve already seen some of that happen a little bit this year, but by and large it doesn't actually matter what happens in the short run. We just get a lot of noise and it scares people. The best thing to do is sit back, make sure your plan is tight, rebalance and make sure your your wrist appropriately, no matter who gets elected because you can't control it. Hey nbc news viewers, thanks for checking out our youtube channel subscribe by clicking on that button down here and click on any of the videos over here to watch. The latest interviews show highlights and digital exclusives thanks for watching.


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