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Illustration: Eniola Odetunde/Axios

Wall Street is digging in for a potentially rocky period as Election Day gets closer.

Why it matters: Investors are facing a "three-headed monster," Brian Belski, chief investment strategist at BMO Capital Markets, tells Axios — a worsening pandemic, an economic stimulus package in limbo, and an imminent election.

  • Investors have digested spiking odds of a Joe Biden win and the likelihood of a blue wave The possibility of a contested election remains a wild card.

Where it stands: The S&P is on pace for the worst week since June, despite yesterday’s partial rebound.

  • For the Dow, it’s set to be the worst week since March.

What's new: Skyrocketing coronavirus cases in the U.S. and Europe are "competing for investors' attention at the same time as we lead up to the election," says Michael Reynolds, investment strategy officer at Glenmede.

  • The threat of further lockdowns (which are already happening across Europe) alongside a worsening outbreak could dent corporate earnings and the fragile economic recovery.

What they're saying: "The market priced in absolute perfection. Any type of sneeze, any type of cough and everyone gets scared," Gene Goldman, chief investment officer at Cetera Investment Management, tells Axios.

Between the lines: The VIX index, which measures market volatility, touched the highest level since June, though it's nowhere near the elevated levels seen earlier this year.

  • Volatility "tends to spike ahead of elections and relative calm returns shortly after the election is decided," Nasdaq's chief economist Phil Mackintosh said yesterday — except in the case of 2000 (the last contested election) and in 2008 (during the financial crisis).
  • But VIX futures indicate investors are betting that election volatility lasts for an extended stretch, Mackintosh notes.

Yes, but: With the exception of 1988, the S&P 500 has seen a positive return from the Tuesday before the election to Election Day ahead of the last 12 presidential runoffs, according to data from Goldman Sachs.

  • The S&P 500 is on track to buck that trend this election year (but there’s still time for the index to fully recover losses).

Go deeper

Tracking the Dow's road to 30,000

It took 218 trading days for the Dow to hit the latest 1,000-point milestone.

Why it matters: Dow 30K is a purely symbolic milestone. The Dow hitting 30,001, for instance, is no less significant.

Dan Primack, author of Pro Rata
9 hours ago - Technology

TikTok gets more time (again)

Illustration: Aïda Amer/Axios

The White House is again giving TikTok's Chinese parent company more to satisfy national security concerns, rather than initiating legal action, a source familiar with the situation tells Axios.

The state of play: China's ByteDance had until Friday to resolve issues raised by the Committee on Foreign Investment in the U.S. (CFIUS), which is chaired by Treasury secretary Steve Mnuchin. This was the company's third deadline, with CFIUS having provided two earlier extensions.

Federal judge orders Trump administration to restore DACA

DACA recipients and their supporters rally outside the U.S. Supreme Court on June 18. Photo: Drew Angerer via Getty

A federal judge on Friday ordered the Trump administration to fully restore the Deferred Action for Childhood Arrivals program, giving undocumented immigrants who arrived in the U.S. as children a chance to petition for protection from deportation.

Why it matters: DACA was implemented under former President Obama, but President Trump has sought to undo the program since taking office. Friday’s ruling will require Department of Homeland Security officers to begin accepting applications starting Monday and guarantee that work permits are valid for two years.