A bitter campaign has ended and Election Day has arrived. Specifically, after months of angry rhetoric, charges and counter charges, the balloting has begun. And a tense Wall Street has remained on edge, concerned about possible changes in monetary and fiscal policy. To be sure, the midterm elections have not been the sole thing on the minds of jittery investors. In fact, for most of the past few months, it has been tariffs, earnings, and the Federal Reserve that have taken center stage. But as Election Day approached, the November 6th voting did become a factor.

Indeed, some of last week's skittishness probably can be ascribed to this critical event. And as for trading yesterday morning, the market opened on a mixed note with the Dow Jones Industrial Average and the S&P 500 Index both climbing from the outset, while the NASDAQ, facing pressure from another sharp drop in shares of Apple (AAPL – Free Apple Stock Report), fell back notably. Things would then stay that way into the latter reaches of the morning, with selective strength in the recently weak food stocks and a comeback in shares of IBM (IBM – Free IBM Stock Report) being noteworthy.

The dichotomy in the market would then carry over into the noon hour, when we saw the Dow, once ahead by 170 points, still up by 158 points, while the NASDAQ was ahead some 80 points. The S&P 500 was continuing to flip back and forth on both sides of the neutral line. Meanwhile, the small-cap Russell 2000 Index would fall more deeply into the red, declining more than 13 points as we moved into the first hour of the afternoon. Breaking the midday market down, we saw that gaining stocks held an edge on the NYSE, but losing issues led the NASDAQ.

Of course, it was more than Apple and IBM, which continued to go in opposite directions, on analyst downgrades and upgrades, respectively. There also was Amazon (AMZN), which declined as the Administration said it might go after the e-commerce giant on anti-trust grounds. Further, shares of Chevron (CVX – Free Chevron Stock Report), a Dow component rallied strongly, along with the energy sector, in general. Meantime, in other news, one session after a strong employment report, there was some trepidation ahead of this week's FOMC meeting.

There, the Federal Reserve, which will meet tomorrow and Thursday, one day later than usual due to the election, is widely expected to leave interest rates unchanged. The central bank, which already has raised rates three times this year, is forecast to hike them one more time in 2018, with a December increase likely, in our view. Investors will be anxiously awaiting the rate decision and accompanying monetary statement for a sense of the lead bank's long-range intentions. As for equities, it continued to be a split decision into the mid-afternoon.

The stock market then would strengthen somewhat as we moved inside the final two trading hours with the Dow climbing to a gain past 200 points, while the NASDAQ's loss would lessen. This dichotomy then would persist into the close, and when all the numbers were in, the Dow would be ahead by 191 points; the S&P 500 Index would be up by 15 points; and the NASDAQ, once off about a hundred points, would finish the session with a loss of just 28 points, even as Apple shares continued to press sharply lower on the day.

Now, as Election Day begins, the bulls and bears were at it in Asia overnight, with the principal indexes posting nice gains in the latest session. In Europe, the leading bourses are tracking lower at this hour, however. Also, oil prices are down a bit and Treasury yields, which ended the session yesterday, at 3.20%, are now at 3.19%. Finally, in what could again be a volatile session, the U.S. equity market looks poised to open matters on a down note. Once more, there should be plenty of profit reports, but the main focus likely will be the election and the Fed.

– Harvey S. Katz, CFA    

 At the time of this article’s writing, the author held positions in one or more of the companies mentioned.