It was a hectic 10-days for the political and financial world, but what seemed like a major election curveball two Fridays ago on 10/28 straightened back out on Sunday when FBI director James Comey said that the FBI would not be changing its recommendation (originally issued in July) regarding Hillary Clinton. Perhaps the biggest winner of the whole drama was the news media, especially the New York Post. Despite the fact that another major political bombshell seems a lot less likely heading into Tuesday, the waves from the political world certainly made their presence felt in the financial markets. When news of James Comey’s first letter to Congress 10 days ago surfaced, stocks immediately sold off and haven’t seen positive territory since. But on Sunday, when Comey stood by his original decision from July, US equity futures surged and have now erased more than half of their losses from when the first letter surfaced.
The chart below shows S&P 500 sector performance from the close on 10/27 (before Comey’s first letter surfaced) through last Friday (11/4). As shown, along with the S&P 500, which was down 2.24%, every sector in the market was down during that period. Sectors that held up the best included Materials and Industrials, which were both down 0.49%. Along with those two, the only sector down less than 1% was Utilities (-0.86%). The more interesting aspect of this chart, however, is on the right side. As shown, Health Care was not only the worst performing sector in the market, but it was the worst performer by a LOT, falling 3.92%, or more than a full percentage point more than the next weakest sector.
What’s interesting about Health Care’s underperformance is that it came during a period when Clinton’s odds in the polls were falling. Based on her tweets and prior policy stances, Hillary Clinton has long been considered the candidate that would be the least friendly to the Health Care sector. Further, a Clinton victory coupled with a Democratic sweep of Congress, which seemed like a possibility two weeks ago, was a nightmare scenario for the sector. However, during a period when Clinton’s odds of winning saw a large decline and odds of a Democratic sweep in Congress all but faded, Health Care was by far the worst performing area of the market.