Expert Take banner over a close-up image of a stock market graph

President Donald Trump, who is 74, has been diagnosed with COVID-19. This raises a lot of questions about what comes next, and markets are reacting to the news.

Market participants are weighing all scenarios, trying to guess how this will impact near-term leadership of the largest country (by GDP) in the world up until January, as well as what repercussions it has for the election itself. Even with increased volatility, long-term investors shouldn’t panic.

Election Uncertainty

While improbable, there’s a concern that the election, which is only four weeks away, may be delayed on this news. It’s uncertain how the market would react if the incumbent nominee were to become incapacitated prior to the election. There will likely be a lot of speculation in the coming days and weeks, so market volatility is likely to persist, if not increase, as the situation unfolds.

Notably, Trump wouldn’t be the first world leader to get infected with coronavirus. United Kingdom Prime Minister, Boris Johnson, announced he contracted COVID-19 on March 27th and was taken to the hospital in early April as his symptoms worsened. The UK stock market sold off almost 7% in the week following his announcement, as the leader has been a key player in Brexit negotiations. The U.K. market bounced back as Johnson recovered, climbing 9% from the bottom of that drop through the end of April.

Brazil President, Jair Bolsonaro, also tested positive for coronavirus in July. The news barely phased Brazilian stocks, and he’s since recovered from what was reportedly a mild case.

What about the market?

Market swings can be unsettling, and there’s a lot to think about with today’s headlines. However, history has proven to us repeatedly that it’s best to wait them out. The S&P 500 has moved 2% or more in 42 trading days this year, the most since 2008, yet the index is still up year-to-date. We’re also in the early innings of an economic recovery, so we believe stocks could run higher in the coming years. But investors need to be patient, because it likely won’t be a straight line up.

With increased uncertainty comes increased volatility. But after the last eight months, you should be a pro at navigating rough waters like this. While the presidential cycle may be four years, you’re likely investing to reach your long-term goals. Pullbacks like this can be opportunities to enter the market or to buy securities you have on your wish list. Remember, on average the S&P 500 has increased about 8% a year over the past 70 years.

This is not a time to panic. We will be here for you as the situation develops.

We wish the President and Melania Trump a speedy recovery.


 
Speech bubble icon next to text "Expert Take"

Headshot of Lindsey BellLindsey Bell is Ally’s Chief Investment Strategist, responsible for shaping the company’s point of view on investing and the global markets. She is also President of Ally Invest Advisors, responsible for its robo advisory offerings. Lindsey has a broad background in finance, with experience on the buy-side and sell-side, in research and in investment banking and has held roles at JPMorgan, Deutsche Bank, Jefferies, and CFRA Research.

Lindsey holds a passion for teaching individuals how to become successful long-term investors. She frequently shares her knowledge as a guest on national news outlets such as CNBC, CNN, Fox Business News, and Bloomberg News. She also serves on the board of Better Investing, a non-profit organization focused on investment education.


The opinions expressed here are not meant to be used as investing advice. For more information, visit our website.